If you’ve spent time looking up spaces for lease you’ve likely noticed a common three letter abbreviation on every.single.listing. CAM. What is Common Area Maintenance -what does it cover, how is the price determined and is there anyway of getting out of paying for it when leasing commercial real estate?
Q. What is CAM
– CAM stands for ‘Common Area Maintenance’ and describes the net charge that gets billed to a tenant in a commercial triple net lease (NNN.) In simple terms; it’s comparable to an HOA fee that residential tenants pay.
Q. Why Do We “Need” CAM.
– CAM fee’s cover the general maintenance of the center, this includes paying for the republic services (trash), the landscaping, the water required for the landscaping, general repairs to the building like the roof, signage repairs etc and a variety of other center maintenance, and services.
Q. How do you determine how much I pay for CAM
– CAM is payed for by the tenants of the center and the estimated CAM expenses are determined yearly based off of the previous year(s) expenses. After the overall CAM cost is estimated it is divided by the square feet percentage each tenant leases.
For example; If it costs $1,000 to maintain the center for a whole year and you occupy 25% of the centers square feet you can be expected to pay $25/CAM per year.
Q. Will CAM prices ever decrease/increase?
– It depends – at Cambridge we do our very best to keep expenses to a minimum because we want our tenants to thrive – occasionally things happen within a center that cause CAM fee’s to go up year-by-year to cover an unpreventable expenses. As for CAM decreasing; generally CAM fee’s are calculated very accurately – but if expenses are over-budgeted the tenant does receive their percentage of CAM fee’s back. The specifics of this can be found in your lease – sometimes CAM is returned in the form prepaying rent, covering next years CAM fee’s etc.
Q. What’s An Average CAM Fee PSF?
– This also depends. CAM covers the cost of maintaining the center, and some center are more expensive to maintain than others. In Las Vegas we try to stick to desert landscaping to keep water/landscaping fee’s down, so it can be assumed that a center with a water fountain, tons of thirsty trees and grass, would have a higher CAM cost. Other factors can also go into the cost of CAM. The cost of CAM at a center full of offices is likely cheaper than one filled with a lot of retail – why? Consider the extra amount of trash a retail center makes (boxes, packing peanuts, high customer trash creation, ect) versus an office space with a few people working in it. A lot of calculation goes into the price per square foot of CAM – if you’re looking to lease a space, ask the property management team of that center for a breakdown of CAM fee’s, it can provide a lot of clarification!
I hope this helped to clarify any questions you might have had regarding Common Area Maintenance Fee’s. If you have questions I didn’t answer please feel free to contact us.