What is Common Area Maintenance?
Common Area Maintenance (CAM) refers to the fees incurred by tenants on top of their base rent that are used to cover routine charges to maintain the shared spaces of a given property.
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How Does Common Area Maintenance Work?
Common area maintenance (CAM) charges are separate fees incurred per month on top of the base rent to cover costs related to property maintenance.
CAM stands for “Common Area Maintenance”, and refers to the fees paid by tenants to their landlord for the maintenance of a property’s common area.
The importance of common area maintenance (CAM) tends to be greater for commercial real estate (CRE) properties since there are more tenants and shared spaces in such properties.
- Usable Area → The usable area is the space that leased by a particular tenant. Therefore, the usable square footage in a building is what is occupied by a unique tenant, inclusive of restrooms, private meeting rooms, and individual offices.
- Common Area → In contrast, the common area of a building is not leased to an individual but is rather accessible to all tenants for collective use. These shared areas can include lobbies, parking space, roof decks, and elevators.
So, who pays for the costs related to maintaining the common area?
Since all tenants have the right to utilize the space, as part of the leasing agreement, each of them contribute towards such payments, usually on a pro rata basis.
With those proceeds, the landlord is expected by tenants to ensure the common areas are kept organized and clean, while fixing issues or repairing damages.
What Does Common Area Maintenance Include?
The most frequent types of common areas at properties include the following examples:
- Lobby and Hallway
- Open Area Workspace
- Fitness Center (Public Gym)
- Janitorial Services
- Elevators
- Parking Spaces
- Shared Amenities
- Surrounding Outdoor Areas (Pool)
- Building Security and Alarm Systems
- Concierge Services
- Roofing and Landscaping
For instance, if the elevator shared by all tenants were to malfunction, the landlord is responsible for fixing the problem promptly.
The clause pertaining to common area maintenance (CAM) charges is stated in commercial real estate leases, where the specific terms around the contractual obligations of each party (the lessor and the lessee) are set.
Furthermore, the type of lease signed between the two parties is key to determining each party’s respective obligations, e.g. triple net (NNN).