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Common Area Maintenance (CAM) Fees in Commercial Leasing: 101

If You Do Not Understand CAM Fees You Will Pay Too Much for Commercial Space

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CAM Fees in Commercial Leases

Understand CAM fees before you sign a lease or you could end up paying a lot more than you want for office space.

Filed In: Leasing Commercial Office, Retail and Industrial Spaces

What are CAM Fees?

When you lease commercial space you pay for more than just the actual square footage you will occupy. In many commercial leases, and in particular retail and industrial space leases, extra fees are often referred to as "Common Area Maintenance" (CAM) fees. In non-industrial spaces, you may hear this expense referred to as "Load Factor," which includes CAM fees.

There are two basic calculations for CAM fees: Variable CAM fees, in which the amount a tenant is required to contribute increases based on a number of factors; and flat CAM fees where the fees are a fixed amount.

CAM fees may be paid monthly, quarterly, annually, or even charged from time-to-time as major repairs to the building or entire business/industrial park are required.

CAM fees can escalate at a different rate than the monthly lease rate because they tend to be more variable. So it is also important that your lease differential between "variable" and "fixed" CAM fees and include some sort of cap, or, maximum your CAM fees can be increased each year. This rate of increase should be a separate consideration from how much you basic rent increases each year.

Most Definitions of CAM Fees are Misleading and Too Narrow

There are many online definitions of CAM fees that define CAM fees as a tenant sharing a portion of the direct costs of maintaining very specific common areas. These oversimplified definitions are not entirely accurate and a landlord may include many indirect costs as CAM fees that are not so obvious. This practice has been hotly debated among industry professionals as to whether or not this is ethical, or even legal. In short, you should never sign a lease without understanding what CAM fees cover in your unique commercial lease.

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