Understanding CAM (Common Area Maintenance) in Real Estate
Common Area Maintenance (CAM) is a critical component of commercial real estate leasing, covering the shared spaces within a property that benefit multiple tenants. CAM fees are essential in multi-tenant properties like shopping centers, office buildings, and industrial parks, where costs for shared areas and services are distributed among tenants.
CAM fees generally cover expenses related to maintaining and managing shared spaces, including hallways, lobbies, restrooms, elevators, parking lots, and landscaping. The specific items included in CAM charges can vary based on the lease agreement but often include costs for cleaning, lighting, security, repairs, and sometimes even property taxes and insurance. These fees ensure that the property remains clean, safe, and welcoming, which benefits both tenants and their customers.
CAM charges are usually billed on a pro-rata basis, meaning each tenant’s fee is based on their leased space’s square footage compared to the entire property. However, CAM fees can be classified as “controllable” or “non-controllable.” Controllable CAM expenses, like cleaning services, are manageable and adjustable by the property management team, while non-controllable expenses, like property taxes and insurance, fluctuate based on market and external factors.
When negotiating a lease, tenants should carefully review CAM terms to understand what is covered and whether caps are set for controllable expenses. A transparent understanding of CAM fees allows tenants to budget more effectively and ensures a positive, mutually beneficial relationship with property owners.