CAM Charges Explained 🧾 | What Every Commercial Tenant Needs to Know

What Are CAM Charges and Why They Matter

Hi again—My name is Casey Prindle, and today we’re going to talk about one of the most common sources of confusion and frustration for commercial tenants: CAM charges. That stands for Common Area Maintenance, and if you’re leasing commercial property, you need to understand exactly what this means before you sign.

CAM charges are typically part of a Triple Net Lease or Modified Gross Lease. They cover the costs of operating and maintaining the common areas of the property—things like:

·         Landscaping

·         Parking lot lighting

·         Sidewalk repairs

·         Exterior cleaning

·         Security

·         Property management fees

In other words, these are shared expenses that benefit the tenants in a building or plaza. But just because they’re shared doesn’t mean they’re always fair or predictable.

Here’s where it gets tricky: CAM charges are often estimated at the beginning of the lease year, and then reconciled at the end. If the landlord underestimated the costs, you’ll get a bill for the difference. If they overestimated, you might get a credit.

Some leases include a management fee as part of CAM. That fee might be 5% or more of the total CAM, which adds up quickly. You’ll want to know how that’s calculated and whether it’s based on actual costs or gross rent.

CAM charges can also include capital improvements, which are larger expenses like resurfacing a parking lot or replacing a roof. Some landlords try to pass these costs through to tenants over several years. If your lease doesn’t clearly define what’s allowed, you might be on the hook for upgrades that don’t directly benefit your business.

Now, let’s talk about controllability. Some CAM expenses are controllable, like landscaping contracts or janitorial service. Others—like property taxes—aren’t. I always try to negotiate a cap on controllable CAM increases, especially in longer duration leases.

It’s also important to ask how expenses are divided among tenants. Are they split by square footage? Are anchors or larger tenants excluded from certain charges? In some cases, smaller tenants end up subsidizing bigger tenants because of poorly written leases.

Here’s a tip: always ask to see the previous year’s CAM reconciliation and the upcoming year’s CAM budget. This gives you a realistic picture of what you’ll pay and how the landlord manages expenses. I get told no often when making this request, but you don’t know if you don’t ask!

Finally, review your lease for CAM audit rights. This gives you the right to inspect the landlord’s records to make sure the charges are legitimate. It’s a great clause to have—especially if you think the numbers seem inflated.

If you’re considering leasing a warehouse or retail space, fill out the contact me form. I’d love to help you find your next Lease space.