Century Blog

Highlights Include:

1. Each lease will vary on what CAM charges are passed through to a tenant
2. Depreciated items are typically not included in CAM charges
3. We recommend CAM charges to be paid by tenants monthly and reconciled by the landlord/management company annually

Q & A on CAM Charges

Real estate agents and landlords often refer to the term “CAM charges.”  What does this term mean and how does it affect landlords and tenants?  “CAM” charges refer to “Common Area Maintenance” charges.  These charges are building operational charges that are usually shared by the various building tenants based on the amount of leased space that each tenant occupies.

What items are included in CAM charges?

CAM charges do not always cover the same things in every building.  In a multi-tenant office building, CAM charges may include lawn care, snow removal, cleaning and maintenance of common hallways, lobby area, and common restrooms.  Water and trash services along with electric and gas service to provide lights, heat and cooling for the common areas could also be included.  Property taxes and insurance may or may not be included in CAM charges.  If property taxes and insurance are included in CAM’s, they will likely be the major component of the CAM charges.  Various property management fees such as administering CAM charges are sometimes included as part of CAM charges.  A careful review of the lease language is needed to determine what charges are included in CAM’s as this can significantly impact the landlord and tenant.

When might an owner not pass-through CAM charges?

As buildings age, CAM charges for repairs and replacement of equipment, repaving of parking lots and replacement of roofs become more difficult to pass onto a tenant who did not participate in the early depreciation of these items.

How are CAM charges calculated & reconciled?

Typically CAM charges are budgeted and allocated to each tenant each calendar year.  After the year is over actual costs are allocated to the tenants.  If a tenant has not paid enough, they will be billed the shortfall if they have been paying a monthly CAM charge.  If the tenant has overpaid, they will receive a credit.  The final step usually includes creating a new budget of expenses for the next calendar year and making an adjustment if the tenant is paying on a monthly basis for a CAM charge.  We strongly recommend CAM charges being paid on a monthly basis by all tenants.

Typical ranges of CAM charges including property taxes and insurance

• Office space- $3.50 to $6.00 per sq. ft. depending on age, condition and quality of the building
• Flex space (part office, part warehouse)- $2.00 to $3.00 per sq. ft.
• Warehouse- $1.25 to $2.00 per sq. ft.

If we can be of help to you in the management or brokerage of your commercial property or another please contact David directly at 402-802-2060.