What is CAM?
CAM stands for Common Area Maintenance. These are the costs associated with operating and maintaining the shared areas of a property, such as the parking lot, lobby, landscaping, and elevators.
In a "Triple Net" (NNN) lease, the tenant pays their pro-rata share of these costs in addition to the base rent.
The "CAM Trap": Uncapped Increases
The biggest risk with CAM is that it can increase significantly from year to year. If the landlord decides to hire a more expensive management company or if property taxes spike, your total rent could increase by 10-20% without warning.
Controllable vs. Uncontrollable Expenses
Not all CAM charges are the same. "Controllable" expenses include things like landscaping, cleaning, and management fees. "Uncontrollable" expenses include property taxes and insurance.
Landlords will rarely cap uncontrollable expenses, but you should always push for a cap on controllable ones.
What to Exclude from CAM
A well-negotiated lease should exclude the following from CAM:
- Capital Improvements: The landlord should pay for a new roof or parking lot repaving, not the tenant.
- Marketing & Leasing: You shouldn't pay for the landlord to find new tenants for the building.
- Executive Salaries: CAM should only cover on-site personnel, not the landlord's corporate overhead.
- Legal Fees: You shouldn't pay for the landlord's legal disputes with other tenants.
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