A common area maintenance (CAM) fee is a standard feature on commercial real estate leases. This fee covers the cost of maintaining the parts of the building shared by all the tenants. Common areas typically include restrooms, lobbies, stairwells, elevators and parking lots.
You want these areas to be clean, safe and presentable, but you also don’t want to pay for more than your share of the upkeep. Here’s what you may be able to negotiate with your landlord to keep these costs down.
Some landlords include operations and maintenance fees, sometimes called an administrative fee, in the lease. This can lead to trouble if the landlord wants to use the administrative fee intended for common area maintenance (like cleaning the restrooms) to pay for general building maintenance (like updating the plumbing). Ask the landlord to remove vague language in the lease or to cap any administrative fees to avoid this.
Upgrades and repairs to the buildings should not be the tenant’s responsibility. Replacing the roof or painting the building extends the life of the property and ultimately benefits the landlord through increased property value and marketing potential. You can ask for precise language that excludes these costs and request an annual review of the CAM expenses to see what was paid.
Caps on Controllable Expenses
The landlord has some degree of control over certain expenses, like the cost of landscaping or cleaning services. This is because the landlord can negotiate these fees or hire a different company to keep costs down. You can ask the landlord to cap these controllable expenses at a specific dollar amount or setting the maximum these costs can increase during the term of the lease.
Minimum Occupation Percentage
Most landlords calculate CAM fees based on the occupancy of the building and spread it out among the tenants. The greater the occupancy rate, the lower CAM fees for each tenant. When the occupancy rate drops, the remaining tenants pay more for common area maintenance. Ask the landlord to establish a minimum occupied percentage when calculating CAM fees to avoid carrying greater than necessary responsibility for the fees.
You may have to pay common area fees when you lease space in a building, but you don’t have to let them price you out of the space. When you want to get a better deal on your company’s lease, talk to an experienced attorney who understands the real estate industry. We’re happy to review the lease before you sign it and help you negotiate terms that benefit your company.