CAM charges (common area maintenance) are the tenant's share of the landlord's cost to operate and maintain the shared parts of a property: parking, lobbies, corridors, landscaping, snow removal, security, and common utilities. Tenants pay monthly estimates and the landlord reconciles them against actual costs after year end.
In a net lease the tenant pays base rent plus a share of what it costs to run the building. CAM is the part of that cost tied to shared spaces. Retail and industrial leases use the term constantly; office leases often fold the same costs into "operating expenses." A general overview is at Wikipedia's entry on common area maintenance charges.
What it typically covers
| Category | Examples |
|---|---|
| Upkeep of shared areas | Cleaning, repairs, lighting, landscaping, snow and ice |
| Services | Security, parking management, waste removal |
| Common utilities | Electricity and water for lobbies, corridors, exterior |
| Administration | Management fees, often capped as a percentage |
| Sometimes | Property taxes and insurance, if the lease includes them |
Leases also list exclusions. Capital improvements, leasing commissions, costs recovered from other tenants or insurance, and the landlord's own overhead are common ones, and the negotiation over the exclusion list is where much of a tenant's CAM exposure is decided.
How tenants pay it
The landlord estimates the year's CAM at the start of the year and bills one twelfth each month. After year end, actual costs are totalled and each tenant's share recalculated. The difference is billed or credited. That true-up, called CAM reconciliation, has its own deadlines, audit rights, and disputes, and is covered in the linked guide.
Why it matters operationally
CAM sits at the intersection of accounting and lease administration. The numbers come from the ledger, but the rules for what can be charged, at what share, subject to which cap, come from each lease. A building with 40 tenants can have 40 different CAM definitions, and the reconciliation is only as accurate as the abstracted lease terms it relies on.
Related terms
Frequently asked questions
What is included in CAM charges?
It depends on the lease, but common items are cleaning and maintenance of shared areas, landscaping, snow and ice removal, parking lot upkeep, security, common area utilities, property management fees, and sometimes a share of property taxes and insurance when the lease treats them as operating expenses.
How is a tenant's share of CAM calculated?
Usually by pro rata share: the tenant's rentable area divided by the property's rentable area, applied to the total CAM cost. Leases often add a gross-up for vacancy, caps on controllable costs, and exclusions such as capital expenditures, which change the number materially.
What is the difference between CAM and operating expenses?
CAM is a subset of operating expenses, focused on shared areas. Many office leases use operating expenses or additional rent as the broader term, including taxes and insurance; retail leases more often use CAM with taxes and insurance itemized separately. The lease definition governs.