Commercial leases are significantly different than residential leases. They last for longer and typically cost far more. They also include an assortment of costs and fees that people usually don’t need to cover when they sign residential leases.
Those renting retail facilities or office space in a large commercial building may end up responsible for CAM fees in addition to their base rent every month. What is the purpose of a CAM fee?
CAM fees cover certain maintenance costs
Common area maintenance (CAM) fees are a popular inclusion in commercial leases. If tenants share access to certain amenities, like a centralized bathroom or a large parking lot at a strip mall, CAM fees help a landlord pay to maintain those spaces.
When a tenant only occupies one unit in a building with multiple other tenants, CAM fees are a standard inclusion in the lease agreement. Sometimes, the lease sets a CAM fee as a flat rate per month based on the landlord’s average operating expenses. Other times, they hold the tenants accountable for a percentage of maintenance expenses as they accrue them.
There are benefits and drawbacks to both arrangements. Sometimes, commercial tenants can negotiate better terms for their CAM fees because they intend to use the space less or have fewer visitors than other tenants.
Business owners often need to review a lease carefully so that they budget for costs like CAM fees. They may also need to prepare for the possibility of fluctuating monthly expenses when unusual maintenance or repair costs arise. In these ways, understanding the purpose of CAM fees and clarifying tenant obligations may benefit those negotiating the terms of a commercial lease.
