One of the reasons that signing a lease is so important for a business is to ensure that the business owner has a firm grasp on the operating expenses that their facilities will produce. Knowing exactly what rent and utilities will likely cost makes it easier to plan a business budget and to project the necessary sales it requires to turn a profit. Unfortunately, there is one kind of cost that could change with little notice depending on the terms in your lease.
The common area maintenance (CAM) fees typically included in commercial leases can sometimes lead to frustration and confusion, especially when a landlord attempts to change how much they want to charge in the middle of your commercial lease. The better you understand what a landlord includes in their CAM fees and how they assess these charges, the better your position will be for negotiating when there is an unexpected change.
CAM fees should help maintain the general facility for all tenants
Every tenant in the building uses the same parking lot or lobby, even if they all rent separate spaces. Depending on the structure and design of the facility, restrooms and kitchen spaces could also be spaces that tenants share, so landlords will pass along all costs for maintaining or repairing these spaces to tenants.
Landscaping charges are also commonly part of CAM fees, as are the salaries that a landlord pays to security or maintenance workers. Landlords may also include insurance premiums for the property and the fees that they assess or a portion of utilities if the separate units do not have individual utilities.
How do landlords apportion CAM fees?
You may understand why your landlord has to pass along certain maintenance charges to you, but you may not feel like the amount you have to pay is fair. The way that landlords split up these fees among tenants can vary based on a number of factors.
In some cases, it is a square footage formula that determines what percentage of the overall fees one tenant pays. Other times, it is their general use of the facilities that will influence how much they have a responsibility for. A company that provides remote tech support will have less foot traffic and use the parking lot less than a retail business.
Negotiating what you pay in cam fees is usually best done at the time you sign the lease or when you negotiate terms for renewal, although you may have to negotiate if your landlord changes the fees mid-lease due to unexpected expenses.