If you’ve ever leased a commercial property, you’ve likely encountered the term CAM. But what does CAM mean in property management, and how does it affect tenants and landlords? Let’s dive into the details of CAM in commercial real estate and break down its importance.
CAM Definition
CAM stands for Common Area Maintenance. In commercial real estate, CAM refers to the expenses associated with maintaining shared spaces within a property. These areas often include parking lots, hallways, elevators, landscaping, and lobbies—essentially any space used by multiple tenants in a building.
What Are CAM Charges in Commercial Real Estate?
CAM charges are the fees tenants pay to cover the maintenance and upkeep of common areas. These charges are typically part of a triple net lease (NNN lease) but can also apply to modified gross leases depending on the agreement. CAM expenses can include:
Cleaning and janitorial services.
Landscaping and snow removal.
Security services.
Utility costs for shared spaces.
Repairs and maintenance for parking lots, roofs, and HVAC systems.
How Are CAM Charges Calculated?
CAM charges are usually allocated among tenants based on their proportionate share of the property. For example, if a tenant occupies 25% of a building’s leasable space, they may be responsible for 25% of the total CAM expenses. Lease agreements will outline the specific method of calculation and payment.
Types of CAM in Commercial Real Estate
Fixed CAM Charges
In some leases, CAM fees are set at a fixed amount, providing predictability for tenants.
Variable CAM Charges
Variable CAM fees fluctuate based on actual maintenance costs, which are reconciled at the end of the year. Tenants may receive a bill or refund depending on the difference between estimated and actual expenses.
CAM Cap
A CAM cap is a limit on the amount tenants are required to pay. This protects tenants from unexpected spikes in maintenance costs.
Why Are CAM Charges Important?
CAM charges ensure that common areas remain safe, clean, and functional, contributing to a positive experience for tenants and visitors. For landlords, these charges help offset the costs of property management and upkeep, making commercial properties more financially sustainable.
CAM in Different Property Types
Office CAM: Covers shared amenities like lobbies, restrooms, and conference areas.
Retail CAM: Often includes parking lot maintenance and exterior lighting.
Industrial CAM: May involve repairs to shared docks or loading areas.
Key Considerations for Tenants
When reviewing a lease, tenants should:
Understand what is included in CAM charges.
Check for provisions like CAM caps or exclusions.
Review reconciliation terms to ensure transparency in cost allocation.
Get Help Managing CAM for Your Property
Managing CAM expenses effectively is a critical part of commercial property management. If you’re a landlord or tenant looking for expert guidance, our team at Pickett Sprouse Commercial Real Estate is here to help. Contact us today to discuss your needs and learn more about how we can assist with CAM in commercial real estate.