Common Area Maintenance
Common Area Maintenance (aka: CAM) is the charge incurred by maintaining the common areas of a building, apartment complex, or condo development. Common area maintenance is usually a flat fee for each business tenant that is added to the monthly lease price. Then at the end of the year, the owner of the property reconciles the total CAM charges and requests extra payment from the tenants for the difference. This means that tenants must account for upcoming common area maintenance costs when they determine whether or not a new space is affordable to lease. CAM can be assessed either monthly, quarterly, or annually.
CAM costs are something that is negotiated between a landlord and a tenant of commercial space, and oftentimes the lease terms amount to hidden costs for renters. Three ways tenants can reduce or avoid these costs is to (1) designate who will pay how much for the landlord’s repair work on the premises, (2) negotiate down management fees, and (3) make sure there are CAM caps in place to incentivize the landlord to keep his or her own costs down when managing the property.
Common area maintenance is an essential part of doing business, which is why businesses can account for it as a necessary operating expense. In an office building, businesses pay for CAM to cover costs associated with hallways, elevators, and the lobby and building security. A business that leases space in a shopping plaza pays CAM to cover the parking lot, sidewalks, trees and seasonal decorations. Common area maintenance fees vary widely based on the type of property and the specific location.