by Bob Sattler of Lee & Associates Orange
As in any business, commercial real estate is loaded with its own jargon–many terms and phrases that, when used in a transactional context, mean something specific to commercial property. One of those phrases is Common Area Maintenance or CAM. You’ll hear brokers discuss CAM, and they’re not talking about engine parts.
Common Area Maintenance (CAM) is just that–the upkeep of shared area within a given property occupied by multiple tenants.
How do you calculate a given tenant’s share of the CAM? The amount you pay is a pro-rata amount based on your square footage versus the project or building as a whole. It is usually paid monthly in addition to your rent and can increase over the term of your lease.
You may be wondering what are considered appropriate expenses to pass onto a tenant. Depending on the property type, it can include hallways, lobbies, restrooms, parking lots, exterior lighting, trash removal, insurance, etc.
As appealing as it might be to a building owner or landlord, many costs should not be included in the CAM. The cost of replacing equipment or capital improvements like the roof, foundations, exterior walls or common area capital improvements, such as parking lot paving, elevators or fences with a useful life of over 5 years, are not part of the calculations.
One question a prospective tenant should ask is if there is a CAM charge. Some property owners or landlords include it in their asking rental rate while others assess it separately. In addition, you should know what that charge is as they can vary widely. Depending on when a property was purchased by the landlord, property taxes can increase substantially for a recent sale, thereby increasing the CAM. By adding the CAM charge to your rent, you will have a more accurate comparison of your true rental cost per month.
As you can see, there is a lot involved with this one industry term. And it can have a significant impact on the rent a business pays. Your best bet is to engage a professional to work with you in understanding all the costs involved in leasing space for your business. At Lee & Associates Orange, we possess the expertise to help you master the entire commercial real estate dictionary.
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About Bob Sattler – Bob is the President of the Orange office of Lee & Associates and has over 35 years of experience in providing commercial real estate services to property owners and users. Experience ranges from developing small industrial buildings for sale and multi-tenant parks for lease to being a broker, leasing and selling office and industrial properties in the North Orange County market. Bob can be reached at (714) 564-7166 or bsattler@lee-associates.com. |
