Definition§
Common Area Maintenance (CAM) refers to the additional rent paid by tenants for the upkeep and maintenance of the shared areas of a commercial property such as lobbies, restrooms, parking lots, and landscaping. CAM charges typically cover expenses including janitorial services, landscaping, security services, utilities, repairs, and occasionally property taxes and insurance.
Examples§
- Shopping Mall: In a shopping mall, CAM charges help maintain and clean the food court, restrooms, escalators, elevators, and parking lot.
- Office Building: Tenants in an office building may pay CAM charges for the maintenance and use of lobbies, conference rooms, and common restrooms.
- Industrial Park: Industrial tenants might contribute to CAM to cover shared security services or the maintenance of communal loading docks and roadways.
Frequently Asked Questions (FAQs)§
How are CAM charges calculated?§
CAM charges are usually calculated on a per-square-foot basis. Landlords estimate the total amount required for maintaining common areas and divide that cost among tenants based on the square footage they occupy.
Are CAM charges fixed or variable?§
CAM charges can be both. Fixed CAM charges mean tenants pay a predetermined amount monthly, while variable CAM charges fluctuate based on actual incurred costs.
Who is responsible for paying CAM charges?§
Tenants are responsible for paying CAM charges as part of their lease agreement. These charges are in addition to the base rent.
What is included in CAM charges?§
Typical CAM charges include maintenance, repair, and operation costs for common areas, janitorial services, landscaping, security, and utilities. Some leases also include property taxes and insurance.
Can CAM charges be negotiated?§
Yes, tenants can negotiate CAM charges when negotiating their lease. Tenants should clarify what is included and ask for caps on CAM charges to avoid unexpected high costs.
Related Terms§
- Gross Lease: A lease agreement where the landlord covers all property-related expenses, including common area maintenance.
- Net Lease: A lease agreement where tenants pay base rent plus additional expenses such as CAM, property taxes, and insurance.
- Triple Net Lease (NNN): A lease where the tenant agrees to pay CAM, property taxes, and insurance in addition to the rent.
- Percentage Rent: Additional rent based on a percentage of the tenant’s sales, often seen in retail leases including a base CAM charge.
Online Resources§
- National Association of Realtors (NAR)
- Building Owners and Managers Association (BOMA)
- Institute of Real Estate Management (IREM)
- International Council of Shopping Centers (ICSC)
References§
- Building Owners and Managers Association (BOMA). “Standard Method for Measuring Floor Area in Office Buildings” (BOMA 2017).
- International Council of Shopping Centers (ICSC). “Shopping Center Management and Leasing: A Guide for Owners, Managers, and Leasing Agents” (2021).
Suggested Books for Further Study§
- “Commercial Real Estate Lease Administration Manual” by Alan A. Alexander
- “The Commercial Lease Formbook: Expert Tools for Drafting and Negotiation” by G. H. Mooney
- “Property Management Kit For Dummies” by Robert S. Griswold
- “Real Estate Finance and Investments” by William B. Brueggeman and Jeffrey D. Fisher
