Common Area Maintenance Fees: Demystifying CAM Charges in Commercial Real Estate
As a commercial property owner or tenant, you may have heard the term "Common Area Maintenance" or "CAM" fees. These fees are often a part of a lease agreement and can be a significant expense for tenants. Understanding what CAM charges are and how they work is essential for any business owner or property investor.
What Are CAM Charges?
Common Area Maintenance (CAM) charges are fees paid by tenants to cover the costs of maintaining and repairing common areas of a commercial property. These areas can include lobbies, hallways, elevators, restrooms, parking lots, and landscaping. CAM charges are in addition to rent payments and are typically paid monthly.
How Are CAM Charges Calculated?
CAM charges are typically calculated based on a tenant's proportionate share of the overall building or property. The total cost of maintaining and repairing the common areas is divided among all the tenants in the building based on their square footage. For example, if a tenant occupies 1,000 square feet in a 10,000 square foot building, they would be responsible for 10% of the total CAM charges.
What Do CAM Charges Cover?
CAM charges can vary depending on the property and lease agreement, but they generally cover the costs associated with maintaining and repairing common areas. These costs can include:
Cleaning: The cost of cleaning common areas such as hallways, lobbies, and restrooms.
Repairs and Maintenance: The cost of repairing and maintaining common areas, such as painting, replacing light bulbs, fixing elevators, and HVAC systems.
Utilities: The cost of utilities for common areas, such as electricity, gas, and water.
Landscaping: The cost of maintaining the property's landscaping, including mowing the lawn, trimming bushes, and planting flowers.
Property Management Fees: The cost of hiring a property management company to oversee the maintenance and repair of the property.
What Should You Watch Out For?
When negotiating a lease agreement, it's essential to pay attention to the CAM charges and how they are calculated. Some things to watch out for include:
Inflated CAM Charges: Make sure the CAM charges are reasonable and not inflated. It's essential to review the lease agreement carefully and ask questions if something seems unclear.
Hidden Costs: Some property owners may try to pass off expenses that should be their responsibility to tenants. Make sure the lease agreement is clear about what is and isn't included in the CAM charges.
Unclear Calculations: The CAM charges should be calculated based on a clear formula that is outlined in the lease agreement. If the calculations seem unclear, ask for clarification.
CAM charges are an essential part of any commercial property lease agreement. They help ensure that common areas are well-maintained and provide a safe and comfortable environment for tenants and their customers. Understanding how CAM charges are calculated and what they cover is essential for any commercial property owner or tenant. Be sure to review the lease agreement carefully and ask questions if something seems unclear.