Leasing a commercial space for your business is a lot more complicated than renting a residential property. You have to take into account not just what you’re required to pay in rent each month, but also the ancillary charges, including CAM. Let’s see what CAM real estate entails to give you a clear idea of how much your business will be incurring each year.
What is CAM in Real Estate?
CAM real estate, the term describes a fee that’s levied on top of standard/base rent in multi-tenant properties, and which are meant to cover maintenance costs for facilities that are collectively shared among the tenants. It’s also common for landlords to pass a fraction of operating costs to tenants through these charges.
Now, there’s no set criteria for what a landlord can and cannot include here. In most cases, however, CAM charges will usually cover the following:
- Upkeep for common facilities (parking lots, elevators, security)
- Landscaping, outdoor lighting, snow removal, garbage collection and general building maintenance
- Insurance and taxes
- Administrative fees, including advertising and management
How are CAM Fees Calculated?
As a rule of thumb, CAM charges are billed pro-rata based on how much square footage one leases. If, for instance, your premises take up 16,000 sq. ft. in an 80,000-square-foot building, you’ll be responsible for 20% of common area maintenance costs. The amount is payable in monthly installments.
CAM fees are anchored in lease agreements, usually with provisions for how the amount will change from one lease period to the next. Your landlord might assign a flat fee with slight annual adjustments to account for inflation; this is called a fixed CAM structure. The alternative is a capped structure where your lease limits your share to a specified amount.
Keeping Your CAM Expenditure Under Control
Like with rent and all other aspects of tenancy, your landlord has the larger in how much you pay in CAMs. But that doesn’t mean there’s nothing you can do to protect your bottom line:
- Know what you’re getting into: It’s important that you have a clear grasp of what your lease entails before committing yourself. Talk to your real estate agent and see a lawyer.
- Verify: Check that your CAM fees correspond to the amount of space you’re leasing.
- Negotiate: Every business yearns to keep customers happy, and your landlord is no different. See if they’d be willing to give you a ‘discount’ on your CAM charges
- Document: Keep records detailing how much you pay in CAMs each year in case you need to iron out disagreements later.
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