How much are Common Area Maintenance (CAM) fees costing your business? While standard in most leases, consider the annual cost and impact on the bottom line during lease negotiations to avoid unexpected costs.
CAM fees are paid in addition to rent. CAM fees represent a portion of the total maintenance fees for a building’s common areas and are allocated to each tenant based on the amount of space they occupy. The most common costs built into a commercial lease pertain to the repair and maintenance of hallways, parking lots, sidewalks, light fixtures, and elevators among others. Unless a business can reasonably show that it does not utilize these areas, CAM fees are a cost of doing business. However, in an effort to make sure CAM fees are fair, request an itemized list of fees for verification purposes. Consider requesting the landlord’s allocation calculations to avoid over or unfair fees, and have the documentation included in any lease documentation.
While CAM fees are a cost of leasing commercial space, tenants should be wary of fees noted as CAM charges that don’t directly or indirectly benefit them. Examples of such expenses are professional service fees for accounting and legal services, advertising and promotion, liability insurance costs, and building management salaries. Tenants should also be aware of any capital expenditures including extravagant additions or renovations to the property. Before signing a lease agreement, pay attention. If the agreement does not plainly state and explain CAM charges, administrative fees, or anything that is not purely base rent, make sure the details are mutually agreed upon and in writing.
For more information, please contact Jimmy Miller at JMiller@aronsonllc.com or Aronson’s Construction & Real Estate team at 301.231.6276.