← Back to Calculator

Demystifying CAM Fees: What Are You Actually Paying For?

If you are signing a commercial lease, especially a Triple Net (NNN) lease, you will quickly become familiar with the acronym CAM. Standing for Common Area Maintenance, CAM fees are among the most unpredictable and confusing aspects of renting commercial space.

While base rent is a fixed number you can easily budget for, CAM fees can fluctuate wildly from year to year. Understanding exactly what is (and isn't) included in these charges is critical to protecting your business's bottom line.

What Are CAM Fees?

In a multi-tenant commercial property, there are spaces that everyone shares: parking lots, lobbies, elevators, public restrooms, and landscaped areas. Since these areas benefit all tenants, the landlord passes the cost of maintaining them back to the renters.

Your share of the CAM fees is calculated based on your pro-rata share of the building. If you occupy 10% of the building's total square footage, you are responsible for paying 10% of the building's total CAM expenses.

What is Typically Included in CAM?

While every lease is different, standard CAM charges usually cover the day-to-day operational upkeep of the property. Common examples include:

• Snow removal and parking lot sweeping
• Landscaping and lawn care
• Janitorial services for shared lobbies and restrooms
• Electricity and HVAC maintenance for common areas
• Security services and property management fees

The Danger Zone: What You Shouldn't Pay For

The biggest trap tenants fall into is paying for capital improvements disguised as CAM fees. CAM is meant for routine maintenance, not upgrading the landlord's asset.

If the landlord repaints the parking lot lines, that is a standard CAM fee. However, if the landlord completely repaves the entire parking lot or puts a brand-new roof on the building, those are capital expenditures. The cost of a new roof should be paid by the landlord, or at the very least, amortized over 15 to 20 years, rather than billed to the tenants in a single year's CAM reconciliation.

The Annual CAM Reconciliation

At the start of the year, your landlord will estimate the total CAM costs and divide them by 12, adding that estimated amount to your monthly rent invoice. At the end of the year, they perform a "CAM Reconciliation." If the actual costs were lower than the estimate, you get a credit. If it were a harsh winter and snow plowing costs skyrocketed, you would receive a bill for the difference.