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As a tenant who leases commercial space, your agreement typically includes your base rent amount based on the square footage you occupy plus additional costs and fees. Most of this extra amount falls under the umbrella of Common Area Maintenance (CAM) fees. The popular view is that CAM fees are a tenant's portion of the cost of shared benefits among all tenants. Yet, when you sign your lease, your landlord might push the envelope on what constitutes shared benefits and sneak some additional costs in, which makes fixed CAM costs attractive. Depending on your lease, you might pay CAM fees annually, quarterly, or monthly and in the event of major repairs you might have to pay. Some landlords negotiate a fixed rate for CAM fees, but more often than not, the amount will vary based on actual expenses.
CAM fees can be a negotiable aspect of your lease, so it's crucial for you to know what items are often included and what can be excluded. Additionally, items included in CAM fees can vary depending on the type of business and property you have leased. This guide provides an overview of the types of costs which you might be responsible for in your commercial lease, the bulk of which are related to the operation, maintenance, and repair of the common areas on the property and in the building where you lease.
When you lease a commercial space you might share hallways with other business, as well as one or more parking lots. These areas and any others which require lighting will fall under CAM fees. Lighting can include anything from lamps in a lobby area to lights in a public bathroom to large posts in a parking lot.
Any expenses for sewer, plumbing, and water use will be included in CAM fees. In larger urban areas and for large properties like shopping malls, you can expect sewer and water expenses to also include storm water management as well as typical maintenance such as cleaning drains, fixing leaks, and emptying septic tanks.
The cost of landscaping included in your CAM fees highly depends on where you are located and the type of property where you lease. Landscaping service can include mowing grass and taking care of leaves in the fall. In other cases, landscaping might also include trimming trees and hedges, planting and maintaining flowers, and cleanup after a bad storm.
Driveways need to be maintained to keep commercial buildings looking professional and prevent any damage or injuries which might lead to a lawsuit, so you can expect to see CAM fees related to maintaining a driveway. This includes fixing holes and cracks, but also means taking care of snow removal for those leasing property in colder climates.
Like driveways, sidewalks need to be maintained to protect customers or clients from getting injuries. This includes repairing broken areas and keeping them free of debris, snow, and ice. If you lease a commercial space, especially those with storefronts, on a city street, your city will typically maintain sidewalks and remove snow. This is not the same in suburbs and small towns, so in these situations you can expect to see CAM fees related to sidewalk maintenance.
Like driveways and sidewalks, parking lots must be maintained on a commercial property. This includes repairing potholes or sinkholes, striping or re-striping, sealcoating, crack sealing, and maintaining ADA compliance with the number of handicapped spaces and van accessible spaces to avoid fines or complaints.
Triple net leases (NNN), which are commonplace in commercial leases, pass all costs for property taxes, property insurance, and liability insurance onto the tenants. They are typically included under CAM costs as operating expenses. The market can influence the amount of taxes you must pay. Insurance cost will remain fairly stable unless the property owner has to make major claims.
Maintaining a safe environment for tenants and visitors is a legal obligation for property owners. Yet, the cost of property security included in your CAM fees can vary greatly depending on the type of building, land, and businesses. You CAM fees might include gate security, video monitoring, alarm and entry systems, and more.
Most commercial properties have some sort of trash common trash area, often including one or more dumpsters, where tenants bring their garbage. The fees to have a service come in and empty dumpsters and recycling containers will be included in common area maintenance fees. When a major renovation or project occurs and more dumpsters are temporarily put on the property, you may or may not see an increase in trash removal fees. This depends on your lease; instead, trash removal for a big project might be included in project costs and charged back to you differently.
Although it depends on the property, it's likely you will see some sort of cleaning costs included in your CAM fees. This might include cleaning and vacuuming in elevator lobbies, seating areas, bathrooms, and other shared spaces. It might also include garbage removal from your business or office and trash/litter pickup outside of the building and in parking lots.
Any maintenance or repairs associates with elevators, escalators, or stairwells might be included in your CAM costs. Keep in mind, however, major replacement of these elements as they age or wear out should not be included in CAM fees.
For example, a new elevator is not an operating expense, instead it is a capital cost which falls on the shoulders of the property owner. Yet, if you have an NNN lease, you will likely still be responsible for replacement, but not as part of the common area maintenance.
Management and administrative fees vary greatly between landlords and buildings, and present another area for negotiating your lease. The property owner, manager, or management company will administer the flow of money between you and your landlord, including reconciling CAM fees at the end of the year. Yet, debate exists about the extent to which a property needs an onsite manager. For example, it's reasonable for a large shopping mall to have an onsite property manager, but a small office complex or strip mall with three or four offices or storefronts doesn't warrant paying a full time salary to have someone onsite.
Good luck negotiating your common area maintenance!