To understand what CAM (common area maintenance) charges are first we need to understand what common area maintenance means. The CAM charges are the costs of managing and maintaining commercial property paid by the tenants to the landlord, the costs may vary from market to market and even property to property. It is a benefit for the Landlord because this way it’s easy to guarantee that the common utilities in their property get reimbursed and the cost of maintenance is cut down in a legal and right manner. The CAM charges may sound like extra charges for the tenants but in return it can be helpful for them, since this way repairs, cleaning, etc are done automatically without them having to worry, after all, the utilities are ultimately enjoyed by the tenants.
Here’s what may include in the CAM charges:
- Parking lot maintenance
- Sidewalks
- Hallways
- Lobby
- Bathrooms
- Elevators
- Lawn and landscaping
- Stairwell
- Water irrigation
- Driveways
- Electricity
- Sewage
- Utilities
- Other operating expenses
Note that the expenses will vary from sector to sector, for example, office, malls, industrial, etc will have their own charges for the type of utilities that come along with them.
Types of commercial real estate leases
There are three main types of commercial real estate leases, let’s look into each one of them
Full-service lease or Gross lease
This is relatively a larger sum of rent for the tenants but this is the only fee that the tenants have to pay when it comes to any kind of charges. One fee includes all the costs and covers property expenses that don’t limit to anything, be it property taxes, maintenance, utilities, etc. Gross lease also happens to be one of the most comfortable agreements that tenants like to make, there are usually no changes in the fee unless it’s some sort of extreme change or emergency.
Modified Gross lease
A modified gross lease is also known as a Modified net lease. This type of lease agreement allows both the tenant and the landlord to find a common ground. It allows the tenants to put in their opinions and make adjustments with the landlord, the whole fee is based on the negotiations when it comes to CAM and other expenses. In this case, the lease remains fixed even if there is an increase or decrease in utility usage or any other kind of fluctuations.
Net leases
Net leases are extremely customizable real estate leases. It comes in four different categories. The main rent fee remains lower than the gross lease but then the tenant has to pay extra for CAM.
The four types of net leases are:
Single net lease
In a single net lease, the tenant only pays the rent for their occupancy and the other expenses of the building are direct to the service providers. The landlord here pays the expenses of the building on their own.
Double net lease
In a double net lease, the tenant also pays property insurance but the CAM is taken care of by the landlord while the tenant pays for the utilities on their own.
Triple net lease
The triple net lease makes the tenants pay separately for the property taxes, insurance, and CAM, with them paying for some of the costs for all of the above. In this structure, the landlords can enjoy maximum benefits but also it allows the tenants to review the fees and get back their leftover money.
Complete Triple net lease
In this case, the tenant pays for everything in the property and becomes solely responsible for the charges. In this type of lease, the tenant can be an acting owner of the property without actually purchasing it.
How do you calculate the CAM charges?
CAM charges differ from landlord to landlord and lease to lease but the main basis on what it’s calculated remains the same. The charges are a percentage that is calculated based on the square footage that is occupied by the tenant by the complete square ft of the property building. So the correct term would be the fee is based on the pro-rata basis that is on the amount of area under the lease.
CAM lease can seem like a chaotic business but with a technology that organizes all the lease agreement’s intricate process and fees, it is simply a trouble-free click.
Springbord provides a hassle-free fixer with an extensive range of solutions for a wide variety of businesses. Commercial real estate lease management doesn’t get simpler than this as we understand how this industry works in and out. Our company puts in years of experience and research in providing a CAM charges solution that you can customize according to your needs. With Springbord’s CAM audit services you can accurately calculate charges. The experts in our company audit the agreement making sure that charges are fair and square, making it easy for both the landlords and tenants. Our solutions are created to handle the commercial CAM lease charges from end to end skipping no parts, giving a perfect score at the end of the day.