Glossary / Lease terms and deal stages
Also known as: Common area maintenance, CAMs
CAM charges are the common area maintenance costs a landlord passes through to tenants as additional rent, such as cleaning, landscaping, snow removal, parking lot upkeep, and security. Each tenant usually pays its pro rata share, with estimates reconciled against actual costs each year.
The SIOR lease glossary defines common area maintenance as "the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to maintain the common areas of the property shared by the tenants." StrataFolio lists typical items including cleaning of lobbies and restrooms, landscaping, snow removal, parking lot repair, security systems, and trash pickup.
Costs are split by Pro rata share. StrataFolio describes CAM reconciliation as the process of comparing what tenants paid during the year with the actual expenses, which leaves either the tenant owing more or the landlord owing a refund.
CAM is additional rent, separate from Base rent. Whether it is included in your commission base depends on your commission agreement. A Grubb & Ellis commission agreement calculated its fee on aggregate base rent, while a CBRE agreement with the State of Michigan used a percentage of "the total rent over the term." The wording decides whether CAM adds to your fee.
CAM also affects how a tenant compares spaces. In a Triple net lease (NNN) the tenant pays CAM on top of base rent, so total occupancy cost, not just the quoted rate, drives the decision.
Read whether your commission is on base rent or total rent, because that decides whether CAM charges add anything to your fee.
For example, a hypothetical tenant with a 20% pro rata share pays estimated CAM based on a $250,000 annual budget, or $50,000. If actual CAM costs are $270,000, the tenant's share is $54,000 and it owes $4,000 at reconciliation.
