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Tips on How to Negotiate CAM Fees in Commercial Leases

Never Accept the Terms of Any Lease Without Negotiating Terms

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Commercial Lease Tips
Filed In: Leasing Commercial Office, Retail and Industrial Spaces

 

CAM Fees Can and Should Be Negotiated

The larger the space you rent, the more likely you will be able to negotiate CAM (Common Area Maintenance) fees and any associated administrative fees. However, no matter how small the space is, never accept the terms of any lease without asking for a better deal.

In a cautionary statement about the difficulty of breaking into the commercial real estate industry, CFO Magazine reporter, Laura DeMars, clearly indicates that even real estate professionals may have a hard time understanding the complexities of CAM fees; “The complexity of the industry makes it tough to break into…” DeMars further states:

“At shopping centers, for instance, tenants usually pay for the upkeep of the building through a common-area maintenance (CAM) fee. While a CFO of a property-management firm doesn't directly manage the tenants, he still needs to understand how those fees are collected … more important, since large retailers often dispute CAM fees or pay only a percentage … the CFO must know how to account for the difference, or CAM slippage.”

Before you attempt to negotiate CAM or Administrative Fees, be sure that you understand what they are. If CAM fees are a complicated issue for CFO’s you better go in prepared!

Industry Standard CAM Fees

Because the condition of certain common areas has a direct affect on tenants, fees associated with the costs of maintenance and repair of hallways, elevators, stairwells, lobbies, and common area restrooms are fairly standard in CAM fees. Also typically assessed to tenants in CAM fees are costs associated with parking lot maintenance (including lighting and landscaping), and sidewalks.

Tips on Negotiating Standard CAM Fees

If the type of fees are non-negotiable, make sure your leases permits you to review the landlord’s bills. This is the only way to ensure you are being charged fairly. You should also negotiate how much CAM fees can increase each year – putting a maximum amount or percentage. This “cap” should be listed separately from any other rent increases.

Next: Tips on How to Negotiate Administrative CAM Fees

Sources:

Rosie Rees. Retail Traffic Magazine Online. “The Battle Over CAM Fees.” September 1, 1999.
Laura DeMars. CFO Magazine. “The Real Deal.” August 2007.

 

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