The term common area maintenance (CAM) refers to the cost of maintaining common areas in commercial buildings that are accessed by all tenants. By including CAM charges, landlords are able to recoup certain expenses incurred when owning and managing properties from CAM reimbursements. This protects the property owner from cost increases, allowing the property’s return on investment to remain relatively stable.
The cost of leasing a commercial building includes two distinct areas, including the usable space available exclusively to the tenants and common areas.
Common Areas
The building’s common areas are located outside of your leased space but are accessible to you and other tenants.
Usable Areas
The square footage in a building that you specifically use as a tenant is the usable area. In addition to individual offices or other facilities your business requires, this area can include restrooms within the space, closets, break rooms, and a reception area.
What Is Covered by CAM Fees?
The cost of repairing, maintaining, and cleaning the common areas of commercial real estate property is included in CAM expenses. The exact costs are determined by the real estate landlord and detailed in the property’s tenant leases. They can differ greatly from one property to the next, but there are a few common examples:
Maintenance of Parking Lots
The costs of sealing parking lots, repairing cracks, and resurfacing them when necessary are covered by CAM charges.
Landscape and Lawn Care
Maintaining a commercial real estate property with significant landscaping can be costly. Mowing the grass, pulling weeds, trimming the trees, and maintaining the sprinkler/irrigation system are all examples of CAM charges for landscaping.
Sidewalks
It is a safety issue to keep sidewalks clear of snow and ice and to repair any broken sections. It is in both the tenants’ and the owner’s best interests to keep them in good working order for the comfort and enjoyment of all customers.
Utilities
If a commercial property’s utilities aren’t separately metered, it’s common for tenants to split the bill.
Other CAM charges exist in addition to those listed above, and the tenant’s lease should be read thoroughly to determine which are addressed.
Maintaining the Common Area
Instead of tenants fighting over who is responsible for maintaining the common areas, the landlord and/or property management company are in charge. They collect the fees from tenants and supervise the space’s management.
These costs are usually covered in detail in a commercial lease, so there is little to no confusion about where the landlord’s responsibility ends and the tenant’s responsibility begins. There is no universal set of expenses.
Whether you’re a tenant or a landlord, it’s critical to consult with an attorney to ensure that the lease adequately covers everything you expect to see.
Why Are CAM Fees Important?
Both the tenant and the property owner are concerned about the amount, timing, and payment of CAM charges.
CAM charges can account for a significant portion of a tenant’s monthly rental payment. As a result, they must budget for monthly rent and CAM charges to determine their total monthly expenditure.
How Are CAM Fees Determined?
Landlords can charge CAM costs to tenants in a variety of ways. Some methods are intended to be simple, while others necessitate more thorough accounting. The method for calculating CAM charges is determined by what makes sense for the property owner and the specific piece of real estate.
According to the National Association of Realtors, the most common method for calculating CAM charges is determining each tenant’s pro-rata share of the property’s square footage. Following that, each tenant pays their portion of the property’s expenses based on the amount of space they occupy.
Software for commercial real estate is a must-have for any property manager looking to save money and time on maintenance and repairs. UnitConnect software for CAM allows you to track and reconcile payments with a simple click from a single dashboard.
