CAM charges are an important part of many commercial leases. But are CAM charges negotiable? In this post, we answer this and other common questions about CAM charges.
What Are CAM Charges?
The “CAM” in “CAM charges” (also known as CAM expenses or just CAMs) means “Common Area Maintenance.”
Simply put, CAM charges are the expenses related to the maintenance of the common areas of a commercial property.
CAM charges include things like parking lot maintenance, landscaping, utilities, security, and snow removal, as well as the cleaning and upkeep of areas such as bathrooms, hallways and lobbies.
As we saw in our blog post about NNN leases, CAM charges are part of the expenses the tenant is expected to pay in a triple net or absolute net lease.
Are CAM Charges Negotiable?
The short answer is yes, just like many other components of a lease contract, CAM charges can (and should) be negotiated.
CAM charges are usually calculated on a pro-rata basis. To put it simply, this means that the space occupied by the tenant is divided by the total space of the building and then multiplied by 100 to determine the percentage of the total space occupied by the tenant.
Once the percentage of the occupied space is determined, the tenant will pay the corresponding share of CAM charges. For example, if a tenant occupies 20% of a building, they’ll be asked to pay 20% of the building’s total CAM expenses.
With that being said, there are other ways to calculate CAM charges. In any case, there are some things a tenant can do to ensure that they pay only a fair amount of CAM charges. For example:
- Setting CAM caps
- Establish exclusions from CAM costs
- Negotiate a minimum assumed occupied percentage
- Include a fixed CAM clause
Disclaimer: This material is for general information and educational purposes only. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
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