CAM (Common Area Maintenance)

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.

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

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

Real Estate Basics: CAM Fundamentals Quiz

### What are CAM charges typically used to cover? - [x] Maintenance and repair of common areas - [ ] Individual tenant improvements - [ ] Marketing costs - [ ] Depreciation of individual offices > **Explanation:** CAM charges cover the maintenance and repair of common areas in a property, such as lobbies, restrooms, and parking lots. ### How are CAM charges usually calculated? - [ ] Based on each tenant's revenue - [x] On a per-square-foot basis - [ ] Equally divided among tenants - [ ] Randomly assigned each month > **Explanation:** CAM charges are generally calculated on a per-square-foot basis, where tenants pay a proportionate share according to the space they occupy. ### Who is primarily responsible for paying CAM charges? - [ ] The landlord alone - [ ] Only retail tenants - [x] The tenants - [ ] Government agencies > **Explanation:** Tenants are generally responsible for paying CAM charges as part of their lease agreement. ### Can CAM charges fluctuate? - [x] Yes, they can be variable based on actual costs - [ ] No, they are always fixed - [ ] Only in certain states - [ ] Only for new buildings > **Explanation:** CAM charges can be both fixed and variable. Variable CAM charges fluctuate based on the actual costs incurred. ### What types of properties typically involve CAM charges? - [x] Commercial properties like shopping malls and office buildings - [ ] Single-family homes - [ ] Agricultural land - [ ] Underground parking structures > **Explanation:** CAM charges are typically part of commercial properties such as shopping malls, office buildings, and industrial parks. ### What might tenants negotiate regarding CAM charges? - [x] Caps on CAM charges - [ ] Reduction in base rent - [ ] Longer lease terms - [ ] Personal property insurance > **Explanation:** Tenants can negotiate aspects like caps on CAM charges to avoid unexpectedly high costs during their lease term. ### CAM charges in a Triple Net Lease are part of what? - [ ] The monthly mortgage payment - [ ] The building principal - [x] Additional expenses along with property taxes and insurance - [ ] Depreciation schedule > **Explanation:** In a Triple Net Lease, CAM charges are additional expenses tenants pay along with property taxes and insurance. ### Who typically manages the distribution and calculation of CAM charges? - [ ] Tenants unions - [ ] City council officials - [x] Property management companies or landlords - [ ] Independent contractors > **Explanation:** Property management companies or landlords typically distribute and calculate CAM charges to ensure all shared area costs are appropriately covered. ### What could be a consequence if CAM charges are too high for tenants? - [x] Tenants may opt not to renew their lease - [ ] Increase in property value - [ ] Decrease in tenant business revenue - [ ] Increase in customer traffic > **Explanation:** If CAM charges are excessively high, tenants may choose not to renew their leases, reducing occupancy rates in the property. ### Which lease type generally does not include CAM charges? - [ ] Triple Net Lease - [ ] Net Lease - [x] Gross Lease - [ ] Industrial Lease > **Explanation:** In a Gross Lease, the landlord covers all property-related expenses, including CAM charges, meaning tenants do not pay additional CAM fees.