What are CAM Fees

							What are CAM and/or CAOE Fees?

When you lease commercial space you pay for more than just the actual square footage you will
occupy. In many commercial leases, and in particular retail and industrial space leases, extra
fees are often referred to as "Common Area Maintenance" (CAM) fees. In non-industrial spaces,
you may hear this expense referred to as "Load Factor," which includes CAM fees.

There are two basic calculations for CAM fees: Variable CAM fees, in which the amount a tenant
is required to contribute increases based on a number of factors; and flat CAM fees where the
fees are a fixed amount.

CAM fees may be paid monthly, quarterly, annually, or even charged from time-to-time as major
repairs to the building or entire business/industrial park are required.

CAM fees can escalate at a different rate than the monthly lease rate because they tend to be
more variable. So it is also important that your lease differential between "variable" and "fixed"
CAM fees and include some sort of cap, or, maximum your CAM fees can be increased each year.
This rate of increase should be a separate consideration from how much you basic rent increases
each year.

Most Definitions of CAM Fees are Misleading and Too Narrow

There are many online definitions of CAM fees that define CAM fees as a tenant sharing a portion
of the direct costs of maintaining very specific common areas. These oversimplified definitions
are not entirely accurate and a landlord may include many indirect costs as CAM fees that are
not so obvious. This practice has been hotly debated among industry professionals as to whether
or not this is ethical, or even legal. In short, you should never sign a lease without
understanding what CAM fees cover in your unique commercial lease.

The Purpose of CAM Fees: What Are CAM Fees For?

Both CAM and Load Factor fees serve the same basic purpose: To require tenants to help cover
the landlord’s direct expenses for “common areas.” Common areas can include both internal
(hallways, elevators, lobbies, public bathrooms, etc.) and external expenses (parking lots,
landscaped areas, etc.).

Be sure to have listed in the lease exactly what your CAM fees will cover, how often they are to
be paid, and how much they can be increased each year. If you will be required to help with the
cost of major renovations like parking lot repaving, or any type of structural repairs get it in
writing. Have the landlord list when these repairs we last made and when they are scheduled or
anticipated to be done in the future.

Not all landlords will require tenants to help with expenses like roofing, parking lot maintenance,
and structural repairs and there really is no “standard” that applies to leases so do not rely on
simply seeing “CAM fees” in your lease – be sure CAM fees are explained.

A landlord may include a wide range of expenses simply listed as “CAM Fees” or “Administrative
Fees” on the basis that these are expenses the landlord pays for the benefit of all tenants. If
CAM fees are not clearly listed or explained in a lease, be sure to specifically ask if you are
paying for any of the following:

       Security systems or salaries or other costs associated with on-site security personnel;
       Permits, taxes, insurance, or any legal costs;
       Advertising, signs, or other general overhead expenses incurred by the landlord for
    operating or promoting the building (i.e., salaries or benefits for on-site or even off-site
    employees);
       Repair and renovations of the property maintenance of the property, including landscaping
    additions or redesigns, exterior painting, exterior or parking lot lighting fixtures, paving or
    resurfacing, roofing, or repairs and upgrades to central plumbing, electrical, sewer, and HVAC
    systems; or
       Utilities, rent, or any other costs of maintaining separate leasing office spaces either on- or
    off-site.