CAM Charges, What Are They?
It’s always crucial to know precisely what you’re paying for when it comes to commercial real estate. Since common area maintenance fees or CAM charges are prevalent in commercial leases, it’s vital for you to understand them and to see whether or not you can negotiate them.
Additionally, CAM charges work on their own and can increase over time, even if the rent remains the same, which means that they can make your lease less profitable or not affordable after a few years have passed.
What Are CAM Charges or CAM Expenses?
When it comes to a vast number of commercial properties, the one renting them has to pay part of the so-called CAM fees or CAM Expenses.
There are two types of these fees or charges:
Variable CAM charges – the amount the lessee has to pay, increases based on a full number of factors.
Flat CAM charges – the amount the lessee has to pay is fixed.
They are also called the ‘load factor’ when they are combined with other types of fees. On their own though, they usually include a lot of different expenses that need to be paid to keep the property working. Some of these expenses are:
Repairs
Maintenance
Insurance
Administrative fees like salaries of the administrative stuff (we’ll discuss these more at the end)
CAM charges are hard to calculate, but it’s enough to know that they depend on the amount of square footage you have. The more leased square footage you possess, the higher the percentage of your CAM charges. Essentially, if you’re leasing a big portion of the property and you have to pay variable CAM charges, you may be looking at a very significant ‘add-on’ you have to pay for.
Can I Negotiate the CAM Charges?
Yes, you can, and you must. But before we explain why and how we must mention that all industry leaders do not accept CAM charges as they vary a lot and are only usually legal.
That’s why it’s imperative to ask about all the costs you have to pay, and to get all of it in writing, preferably itemized. Have your commercial real estate attorney with you who will make sure that everything there is legal.
Standard CAM charges usually include maintenance and repair of elevators, hallways, lobbies, stairwells, common area restrooms, and parking lots.
However, whichever CAM charges are included, you should always try to negotiate them, even if your landlord expects you to trust them with these fees by not viewing them. Besides, if the charges are non-negotiable, you still deserve to know them, and you should ask about them.
You also need to make sure that, if the CAM charges increase each year, that there is a maximum involved. All CAP charges need to have a maximum level which they shouldn’t go over as they can become ridiculously high.
In the end, if CAM charges include administrative fees or operations and management fees, you must object immediately. That’s because the landlord is most likely trying to get you to contribute to his or her own expenses which you do not need to cover.
If you want to know more about CAM charges, feel free to reach us at info@cbicommercial.com