A Practical Guide for Tenants and Landlords in Commercial Real Estate

In the world of commercial real estate, understanding the fine print of a lease can make or break your bottom line. One of the most commonly misunderstood components of a lease is Common Area Maintenance charges, better known as CAM fees.

At LoopedIn, we believe in helping our community get clarity on what matters most—like where your rent money is really going. Let’s break it down.

What Are CAM Charges?

CAM charges are the shared costs tenants pay to maintain the common areas of a commercial property—spaces everyone uses but no one rents exclusively. Think: lobbies, hallways, elevators, parking lots, landscaping, and bathrooms.

These costs can include:

• Landscaping
  
  

• Parking lot repairs
  
  

• Janitorial services
  
  

• Water, electric, and sewer for common areas
  
  

• Window cleaning
  
  

• Sidewalk and stairwell maintenance
  
  

• Property management fees
  
  

• Administrative and legal costs related to operations
  
  

They don’t usually include anything tenant-specific, like electricity for a server room or your own janitorial team.

Do CAM Charges Come With the Rent?

That depends on the type of lease you’ve signed. Here's how CAM expenses are typically structured:

Example: If you're in a triple net lease and you occupy 15% of the building, you're paying for 15% of the total CAM expenses—billed separately from base rent. With a gross lease, those costs are already baked into your monthly rent.

What’s Included in CAM Charges?

What’s included in CAM fees varies depending on the property type and lease agreement. Here's a quick breakdown:

🏢 Office Properties

• Landscaping
  
  

• Parking lot care
  
  

• Janitorial services
  
  

• Lighting
  
  

• Restroom water use
  
  

• Window washing
  
  

• Management fees
  
  

🏭 Industrial Properties

• Lighting for exterior/common zones
  
  

• Parking lot upkeep
  
  

• Landscaping
  
  

• Basic utilities
  
  

• Admin fees
  
  

🛍️ Retail Properties

• Sidewalk and driveway maintenance
  
  

• Loading docks
  
  

• Stormwater drainage
  
  

• Security and lighting
  
  

• Shared delivery areas
  
  

💡 Tip: Always ask for a detailed CAM list in your lease. What’s included—and what’s not—can affect your bottom line significantly.

How Are CAM Charges Calculated?

Most property managers estimate CAM charges at the beginning of the year based on the property’s projected operating budget. Tenants then pay a monthly portion based on their percentage of the building’s leasable square footage.

Let’s say CAM expenses are expected to be $120,000 for the year, and you lease 10% of the space. Your CAM share is $12,000/year, or $1,000/month.

Year-End CAM Reconciliation

At the end of the year, landlords compare estimated costs with actual expenses. If you overpaid, you get a credit. If you underpaid, expect a bill.

Legal Considerations Around CAM

CAM fees should be clearly defined in your lease:

• What they include
  
  

• How they’re calculated
  
  

• Whether there's a cap on increases
  
  

• Whether you have audit rights
  
  

Ambiguous CAM language is one of the leading causes of landlord-tenant disputes in commercial leases.

✅ Landlords should provide an annual reconciliation with a breakdown of charges.
✅ Tenants should review it carefully and ask for clarification on any line item that doesn’t make sense.

Also note: Some local jurisdictions have transparency rules around CAM disclosures—make sure your lease complies.

Can CAM Charges Be Negotiated?

CAM expenses are reimbursements, so they’re not usually negotiable in the traditional sense. But there are a few smart strategies to reduce risk:

• Negotiate a cap on CAM increases per year (e.g., no more than 5%).
  
  

• Exclude capital improvements from CAM unless they reduce operating costs.
  
  

• Limit “uncontrollable costs” like utilities or snow removal with specific language.
  
  

A tenant representative broker can help you secure favorable terms before signing.

Why CAM Matters for Investors

CAM charges aren’t just a tenant concern—they’re a major factor in your net operating income (NOI) and cap rate as a property owner.

Well-managed CAM expenses can:

• Lower operating costs
  
  

• Improve cash flow
  
  

• Increase asset value
  
  

If you're investing in or managing commercial real estate, get ahead of the curve by scheduling regular appraisals and reviewing CAM structures annually.

Best Practices for Everyone Involved

For Tenants

• Know your lease: Read and understand your CAM responsibilities before signing.
  
  

• Ask for a breakdown: Request a detailed annual CAM report.
  
  

• Budget wisely: Include a cushion for year-end reconciliation.
  
  

For Landlords

• Be transparent: Share clear CAM breakdowns and update tenants when adjustments are made.
  
  

• Maintain proactively: Avoid unexpected CAM spikes through regular upkeep.
  
  

• Consult legal counsel: A solid lease today avoids disputes tomorrow.
  
  

Final Word from LoopedIn

Whether you’re leasing a 2,000-square-foot office or managing a multi-tenant shopping center, understanding CAM charges is essential. It's not just about rent—it's about the total cost of occupancy.

At LoopedIn, we’re here to help commercial real estate professionals cut through the jargon and operate with clarity. Want more real-world tips from other CRE insiders? Join the conversation in the LoopedIn community.