If you lease commercial property, you probably encounter CAM charges. These additional costs significantly impact your total financial obligations. Understanding what they include helps you manage your expenses more effectively. A well-structured lease agreement shields your business from hidden costs that inflate your monthly obligations.
CAM charges explained
CAM stands for Common Area Maintenance. These charges reflect shared expenses that tenants pay to maintain non-exclusive areas in a commercial building. These areas include lobbies, corridors, elevators, parking lots, landscaping, and security services. Property owners divide these expenses among tenants based on the square footage each tenant occupies. Shared areas play a key role in the operation and appearance of the property, and proper upkeep supports tenant satisfaction and property value.
Typical costs included
CAM charges often include janitorial services for shared spaces, utility expenses for outdoor lighting, and routine maintenance like snow removal or lawn care. Repairs to shared infrastructure like roofing or driveways also fall under this category. Each lease outlines what qualifies as a CAM expense, so examine your agreement closely. Some leases also list administrative or management fees. In some cases, CAM charges also cover property insurance for common areas or property taxes.
How charges are calculated
Leases may structure CAM charges as fixed or variable. Fixed CAM fees stay the same each month. Variable charges depend on actual incurred costs and adjust annually. If expenses exceed estimates, tenants pay the difference. If they fall below estimates, tenants receive a credit. Most leases apply a pro-rata share method, where tenants contribute a percentage based on their leased space relative to the entire property. This method distributes shared costs fairly and transparently.
CAM charges directly affect your monthly rent and overall budget. If you don’t understand what they include, you may face unexpected increases. Ask for a detailed breakdown and check whether the lease limits annual increases. These steps help you plan ahead and manage long-term expenses effectively. Paying attention to these details leads to smarter, more cost-effective leasing decisions.