March 19, 2025

Common Area Maintenance (CAM) in Commercial Real Estate

When crafting a commercial lease, it’s essential to consider the inclusion of Common Area Maintenance (CAM) charges. These fees are not only standard practice but serve a pivotal role in ensuring the long-term upkeep and value of your property. CAM charges are a typical component of any triple-net commercial lease, which is a type of lease agreement where the tenant is responsible for the property’s expenses, including real estate taxes, building insurance, and maintenance—essentially, the three ‘nets’: property taxes, insurance, and maintenance. CAM charges help offset the cost of maintaining the building over the long term. By incorporating CAM charges into your commercial lease agreement, you will be able to boost the net operating income of your property.

What Are CAM Charges?

Common Area Maintenance (CAM) charges are included in commercial leases to offset the maintenance costs of a property that all tenants use and enjoy. For example, in a multi-unit building, all tenants will pay CAM charges for maintaining common spaces, such as the lobby or parking lot.

Generally speaking, property owners favor CAM fees because they allow real estate investors to pass off the cost of maintaining the property to the tenants. By requiring the tenants to pay CAM charges, property owners can enjoy more significant investment returns on their property.

Tenants, on the other hand, sometimes feel suspicious of CAM charges. They know that a wide range of fees can be included in CAM charges, and they want to make sure that they are being given a fair deal on their commercial lease. When property owners draft a clear and concise commercial lease that outlines the CAM charges, they are more likely to earn the trust of the prospective tenant.

CAM charges may initially seem like a burden to the tenant, but they do provide renters with assurance that maintenance will be prioritized at the property. Without CAM fees, tenants may wonder if the property owner will continue maintaining the common spaces up to their standards. In addition, tenants who are leasing in a multi-unit building can rest assured knowing that all renters in the building are sharing a portion of the CAM fees, which can decrease the financial burden of utilities and maintenance.

What’s Included in CAM?

While CAM charges are very common, there is no industry-wide standard for what should be included in these fees. These are some of the costs that are commonly included as part of the CAM charges:

Parking Lot Maintenance and Outdoor Lighting

The parking lot is one of the most frequently used common spaces in a commercial building, and the high traffic volume can result in hefty maintenance costs over time. Most property owners who include CAM charges as part of their commercial leases charge fees for maintaining the parking lots and outdoor lighting on the property.

Some of the ongoing maintenance services for parking lots include:

• Repairing cracks and filling potholes that develop in the parking lot.
• Resurfacing the asphalt.
• Repainting the parking lot lines.

For outdoor lighting, common maintenance tasks include:

• Repairing the light fixtures in parking lots and along the sidewalks.
• Replacing the bulbs when they are burnt out.
• Fixing electrical issues that may be impacting the outdoor lighting.

Landscaping Expenses

Depending on the size and location of the commercial building, the property owner may invest in landscaping in the outdoor area. Landscaping helps to improve the appearance of the building and can boost its overall value. Many of the most qualified commercial tenants are searching for buildings that include landscaping, as it helps to beautify the commercial space and improves the reputation of the tenant as well.

When there is landscaping in place at a commercial building, CAM charges can help reduce the cost of maintaining and preserving the grass, shrubs, and flowers that are growing outside the building. Landscaping expenses may include:

• Mowing the lawn.
• Beautifying the space with mulch, shrubs, plants, or flowers.
• Applying fertilizer treatments to the landscaping.
• Installing and maintaining a fertilizing system.

Restroom Maintenance

In some commercial buildings, the restrooms are located in common areas where all of the tenants have access to them. This is particularly commonplace in office buildings or healthcare facilities, where restrooms are often located in the hallways or lobby areas.

If the restrooms are located in a shared space in the building, restroom maintenance fees may be included as part of the CAM charges. Some of the costs associated with restroom maintenance include:

• Paying a cleaning company to clean the restrooms regularly.
• Restocking the restrooms with toiletry products and additional supplies.
• Repairing the toilets, sinks, or other pieces of equipment that are located in the restrooms.

Sidewalk Maintenance and Snow Removal

When a commercial property has sidewalks along the perimeter, maintenance is required for both aesthetic and safety purposes. If a tenant or customer were to fall and injure themselves on a sidewalk that has not been adequately maintained, the property owner could be held liable.

Sidewalks are particularly prone to damage in climates where the temperatures fluctuate throughout the seasons, so any commercial property owner needs to have a maintenance plan in place. The costs of maintaining sidewalks can be included as part of the CAM charges. Sidewalk maintenance fees may help to cover:

• Repairing or replacing cracked or damaged sidewalks.
• Removing snow or ice from sidewalks during the winter season.

Lobby and Elevator Maintenance

Many commercial properties, regardless of their intended usage, have lobby areas designed to greet and welcome employees, guests, and customers. The lobby area will have a significant impact on any visitor’s first impression of the property and can also impact the building’s total value.

Any tenants renting a unit in the building will want the lobby to look professional and always clean. As a result, lobby maintenance fees are often included as part of the CAM charges. In a multi-story building, elevator maintenance fees also may be lumped into the CAM charges as well. Services required to maintain lobby areas properly and elevators include:

• Purchasing furniture and accessories for the lobby.
• Paying for a cleaning service to clean the lobby and elevators regularly.
• Performing routine inspections on the elevators and paying for repairs when necessary.
• Maintaining the lighting in the lobby and hallways to improve the appearance of the building and create a safe space for all tenants.

Capital Improvement Costs

Capital improvement costs may be incorporated into the CAM charges, as these projects can often be incredibly costly and time-consuming. However, if a commercial property owner is going to include capital improvement costs in the CAM charges, the building owner needs to be as transparent as possible. 

Tenants may not expect to cover the cost of capital improvements, but in a long-term lease, it may make sense for the property owner to add some capital improvement fees to the CAM charges. When drafting the lease, requirements for capital improvement costs should be clearly outlined to avoid future disputes. Some capital improvement costs that may be incorporated into the CAM charges include:

• Repairing or replacing the roof of the building.
• Addressing any issues with the building’s foundation.
• Fixing or replacing any part of the building’s HVAC system.
• Improving or repairing the plumbing or electrical fixtures in the building.

Various Operating Expenses

The operating expenses included in the overall CAM charges will vary from building to building, often based on the size and location of the building, the number of tenants, and its typical usage. Some of the operating expenses that may be included as part of the CAM charges include:

• Paying for utilities, such as electrical, gas, and water.
• Investing in on-site security to protect the safety of those on the property.
• Paying a property management company to maintain the building.
• Paying for permits that are required to maintain and occupy the building.
• Covering the costs of property taxes and insurance.
• Covering administrative costs.

Do All Commercial Lease Terms Include CAM Charges?

No, not every commercial lease will include CAM charges. Whether you will have CAM charges as part of your commercial lease will depend on the type of lease. These are some of the most common types of commercial lease agreements.

• Triple-Net Lease. Triple-net leases almost always include CAM charges in the agreement. In these leases, the tenant takes on more responsibility for the repair and upkeep of the building. They are commonly used for retail buildings, such as restaurants or shopping centers.
• Double-Net Lease. In a double-net lease, the tenant is often not required to pay CAM charges. The property owner will take care of all maintenance expenses, but the tenant may be required to pay a portion of the property taxes and insurance. Double-net leases are typically used for industrial buildings.
• Net Lease. Commercial property owners rarely use net leases, but when they do, they do not include CAM fees. In a net lease, the property owner covers most costs, including insurance and common area maintenance. The tenant may only be required to pay a small portion of the property taxes.
• Modified Gross Lease: In a modified gross lease, the tenant is often not required to pay CAM charges in addition to the base rent, as the property owner will typically take care of all maintenance expenses. However, the tenant still may be required to pay their share of property taxes and utilities. 
• Full-Service Gross Lease: In a full-service gross lease, the tenant will often pay one monthly rent amount which includes within the base rent the costs for CAM, property taxes, and insurance.  However, there are commonly provisions for tenants to still pay their share of increases to these expenses. 

How Are CAM Charges Calculated?

There are several methods that you can use as a commercial property owner to calculate CAM charges. The most frequently used methods include:

Determining the Pro Rata Share of Square Footage

The most common way to determine CAM charges is to base the fees on the space a commercial tenant takes up in the building. This allows you to distribute the fees as fairly and equitably as possible among your tenants. To calculate the CAM charges for an individual tenant, you would divide the total charges accrued annually by the amount of square footage in the building. The formula will give you the total amount a tenant should pay per square foot of occupied space.

Charging CAM Fees Based on the Load Factor

Another way that some commercial property owners calculate CAM charges is to consider the load factor. The load factor is the percentage of the building used as a common area and is often incorporated into the lease as part of the rental agreement.

Establishing Fixed CAM Charges

Fixed CAM charges are pretty simple and are becoming increasingly popular in commercial lease agreements. They are flat-rate fees that cover maintenance expenses of the common areas and are adjusted annually to cover the cost of inflation.

How CAM Will Appear in Your Rent

CAM charges will be listed separately as part of your rental invoice, allowing tenants to quickly determine what they pay for common area maintenance in the building.

CAM Fee Price Caps and Floors

Tenants may work with their prospective commercial landlord to negotiate CAM fee price caps and floors. By implementing a price cap or a price floor, tenants are protected from fluctuating prices yearly.

Learn More About Commercial Leases With RakowGroup

Procuring the most reliable and trustworthy tenants is a critical part of your investment strategy as a commercial property investor. To generate commercial lease agreements that benefit both the tenant and you as the property owner, you should partner with a full-service commercial real estate firm.

At RakowGroup, we can help you attract and retain the most qualified tenants by creating clear, comprehensive commercial lease agreements for your entire investment portfolio. Contact us today to learn how CAM charges can bolster your investment returns.