Commercial lease agreements often include more than just monthly rent. Common Area Maintenance (CAM) charges are one of the most important costs to review before signing. While these fees are common in multi-tenant buildings, they can add significantly to your total lease expense if not fully understood.
Knowing how CAM charges work—and how to evaluate and negotiate them—can help you protect your business, control expenses, and avoid costly surprises.
What CAM Charges Cover
CAM stands for Common Area Maintenance. These charges cover the cost of maintaining shared spaces in the building that all tenants use. Property owners collect CAM fees to keep these common areas functional, safe, and visually appealing for everyone in the building.
Typical CAM charges may include:
- Maintenance and repairs for common areas (hallways, lobbies, elevators)
- Landscaping, lawn care, snow removal, and seasonal plantings
- Janitorial services for shared spaces
- Security systems and personnel
- Utilities for shared areas (electricity, water, HVAC)
- Property management fees
- Property insurance and taxes (sometimes bundled into CAM)
Always review your lease to confirm exactly what your CAM fees include. Vague or unclear language may leave you responsible for costs you didn’t anticipate.
How CAM Charges Are Typically Calculated
CAM charges are typically divided among tenants based on how much space each tenant occupies. This calculation is called your “pro rata share.”
For example:
If a building has 100,000 rentable square feet, and your space covers 10,000 square feet, your share of CAM costs would generally be 10%.
However, every lease handles this calculation slightly differently. Ask your landlord or broker:
- How is rentable square footage calculated?
- Are vacant spaces excluded or included in the CAM allocation?
- Are shared common areas properly accounted for?
In some cases, tenants may unknowingly absorb the costs of vacant units if the lease structure allows landlords to distribute those expenses across occupied spaces.
The Three Common CAM Fee Structures
Understanding which type of CAM structure applies to your lease is key for budgeting:
1. Fixed CAM
A consistent monthly amount agreed to at lease signing. You pay the same amount regardless of actual expenses. This structure simplifies budgeting but requires careful review to ensure it includes all anticipated costs.
2. Variable CAM
CAM charges adjust annually based on actual building expenses. At year-end, landlords reconcile estimated payments with actual costs, resulting in a credit or balance due. While this structure reflects true costs, it can create unpredictable expenses.
3. Pro Rata CAM
This structure divides costs based on your share of the property, typically determined by square footage. This method is common in multi-tenant buildings but can vary depending on how rentable space is defined.
Hidden Costs to Watch For
CAM charges often contain additional costs that may not be immediately obvious. Review your lease carefully to identify:
- Capital Improvements: Major upgrades such as new roofs or HVAC systems. These improvements benefit the landlord long-term and may not be appropriate for tenants to fully fund. If included, negotiate amortization over time.
- Administrative Fees: Some landlords add management markups to service charges, often ranging from 10% to 15%. Confirm which services carry these fees and ensure they’re reasonable.
- Uncapped Increases: Without annual caps, CAM charges can escalate unpredictably. Ask for a cap on yearly increases, typically between 3% and 5%.
- Double Billing: Confirm that services aren’t being charged twice under both base rent and CAM fees.
Negotiating CAM Terms
CAM charges are negotiable in many commercial lease agreements. Addressing these terms before signing can prevent disputes later. Common areas for negotiation include:
- Annual caps on increases
- Clear exclusions for capital improvements
- Audit rights to verify CAM charges
- Limitations on administrative fees
- Gross-up protections to avoid paying for vacant space
An experienced broker can help you evaluate these terms, advocate on your behalf, and secure a fair lease structure.
Questions to Ask Before Signing
Before committing to a lease, clarify CAM details with your landlord or broker:
- How are CAM fees calculated?
- What specific services are included or excluded?
- Are fees fixed, variable, or pro rata?
- Is there a cap on annual increases?
- How are vacancies handled in cost allocation?
- Are capital improvements part of CAM?
- Do I have audit rights?
- Are taxes and utilities billed separately or included?
- How frequently are reconciliations conducted?
Having these answers upfront allows you to make a fully informed decision.
DeLille | Field: Helping You Navigate Lease Costs
CAM charges don’t need to be overwhelming. With the right guidance, tenants can fully understand their financial obligations and avoid hidden risks.
At DeLille | Field, we help businesses analyze lease terms, clarify CAM structures, and negotiate favorable agreements that protect long-term interests.
Before you sign, let’s review the details together. Schedule a consultation with DeLille | Field and gain confidence in your next commercial lease.
