Common area maintenance (CAM) is a type of cost that businesses or organizations are required to pay when they lease a commercial building. It is the costs attributed to maintaining all common areas like hallways, elevators, parking lots, and lobbies. This is separate from the cost of leasing a usable space since multiple tenants typically share these common areas in the building.
CAMs should be fair for the tenant and the property owner and account for wear and tear in common areas over time. Typically, tenants will divide up their contributions so that those who occupy more of the total mass of the space would pay proportionally more towards the CAMs than those occupying less space. Additionally, CAMs can cover any repairs needed for infrastructure within a building. These repairs may include repairing walls, painting doors, fixing roads leading up to the property, lighting fixtures, and much more.
Property managers calculate CAM fees at the beginning of each year based on anticipated expenses for the entire commercial property. Then they are divided proportionally among tenants using their square footage and the building’s gross leasable area. Tenants pay these fees as part of their monthly operating expenses in small increments throughout the year.
The property manager reconciles estimated common area maintenance costs with actual ones at the end of the year. If actual costs are lower than estimated, tenants will receive extra credits based on their earlier contributions. The CAM fee structure allows every tenant to contribute fairly to shared areas and provides reassurance that their money is being used for planned repairs and refurbishments.
Some common area expenses include preventative maintenance such as:
Parking lot striping and ongoing maintenance
Lawncare and landscaping
Hallway safety and maintenance
Bathroom expenses such as janitorial costs, toilet paper and hand towels
Basic elevator maintenance
Utilities in common areas, such as parking lot lighting and water in bathrooms and hallways
Center signage maintenance
Property management fees
Pest control services
While this is a general list of possible CAM fees, it’s important to consider the commercial property you want to purchase. Account for all future property maintenance costs to avoid expensive surprises.
By examining historical data, reviewing data from similar buildings in the area, and engaging a qualified Tenant Rep, you’re ensuring that your CAM rate will be fair before you sign on the dotted line. These proactive steps will help protect your interests and ensure that you pay only what is necessary for common area maintenance expenses when leasing space for your business venture.
A local commercial real estate broker will be able to provide a range of CAMs in the area to provide an idea of possible fees. You may also ask for a history of any proposed building’s CAM rates and upcoming maintenance proposals.
One common way tenants ensure a fair CAM rate is by retaining a clean, well-maintained space. The overall CAM should remain low by reducing the need for repair expenses.
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