Operations and Management (O&M) Administrative Fees
If your lease requires you to pay CAM fees for any operational or management costs – immediately object to such costs. If the landlord insists, ask to see a list (proof) of these costs and how your share has been calculated. These fees may not actually be called CAM fees, but “Administrative Fees.” Administrative fees are still CAM fees – the landlord is trying to get you to contribute to his/her own costs. Administrative fees are usually based on a percent of the total CAM costs.Tips on Negotiating O&M Administrative Fees
Most tenants will object to operational and management fees because the landlord is already making income off the rent being charged even without CAM fees. If your CAM fee includes salaries for management or administrative staff (on- or off-site), liability insurance costs (you will have to pay for your own liability insurance – the landlord will require this before you can move in), advertising and other promotional activities, professional services such as legal or accounting services, try to negotiate these out of your lease.According to Rosie Rees, “The Battle Over CAM Charges,” Retail Traffic Magazine; “Savvy tenants will reduce the percentage (which ranges from 25% to 5%), and exclude non-maintenance-type costs from the calculation (e.g., taxes, insurance, utilities).”
Rees also believes that maintenance and repair costs related to the buildings (i.e., roofs, building foundations, and exterior walls) should not be absorbed by tenants as these are not common areas used by the tenants or their customers. Rees accurately points out; “The landlord already gets income from those buildings in the form of rent. Any costs of maintaining and replacing them should be paid by the landlord out of rental income.”
Sources:
Rosie Rees. Retail Traffic Magazine Online. “The Battle Over CAM Fees.” September 1, 1999.
Laura DeMars. CFO Magazine. “The Real Deal.” August 2007.
