Common area maintenance (CAM) charges are one of the most negotiated — and least understood — components of a commercial real estate lease. These charges cover the ongoing costs of maintaining shared property spaces, from landscaping and parking lots to building security. At year-end, landlords reconcile projected CAM charges against actual expenses and pass along adjustments to tenants. While essential, CAM charges can be confusing, and if you’re not careful, you could end up paying more than your fair share.
In this blog, we’ll explain what CAM charges are, what they typically include, how they are calculated and reconciled, and the impact they can have on both tenants and investors.
What Are Common Area Maintenance (CAM) Charges?
CAM charges are the costs of maintaining these common areas and are paid by tenants to landlords to help cover costs associated with overhead and operating expenses. For landlords, CAM typically includes any expense required to maintain, repair, operate, and manage the property as a whole. Tenants, however, usually view CAM more narrowly as the upkeep of shared spaces such as lobbies, parking areas, restrooms, and security systems.
This difference in perspective often makes CAM charges feel vague or inconsistent, underscoring the importance of detailed language in the lease agreement.
What’s Included in CAM Charges?
CAM charges depend on the property type (retail, commercial, office, industrial, etc.), tenant, type of lease (gross, modified, or net), and more. The specific expenses included in CAM vary depending on property type (retail, office, industrial), lease structure (gross, modified gross, or net), and the negotiated lease terms.
Here are some common examples of typical operating expenses a landlord can incur and label as a common area maintenance charge and bill the tenant for:
- Repair and maintenance of parking lots
- Snow removal
- Trash removal
- Landscaping
- Janitorial services
- Pest control services
- Security
- Insurance
- Real estate taxes
- Center signage
- Common area utilities
- HVAC maintenance
- Landlord’s administrative fees
Depending on the property, CAM charges may also include elevators, exterior lighting, irrigation systems, window washing, loading docks, sidewalks, driveways, renovations, or other site-specific costs.
SIG Insight: Inconsistency in CAM charges across markets makes them one of the most negotiated parts of a lease. Tenants should always request a detailed CAM breakdown before signing.
How Do You Calculate CAM Charges?
At the start of the year, the landlord will forecast the CAM expenses for the entire property and then divide the amount across the tenants in the building. A tenant’s share of CAM expenses—called the pro-rata share—is calculated by dividing the tenant’s square footage by the property’s total gross leasable area. At year-end, landlords reconcile projected versus actual CAM expenses and issue a statement detailing whether tenants owe additional payments or receive a credit.
Calculating Pro-Rata Share Example: If your unit is 2,000 SF in a 20,000 SF shopping center, your pro-rata share is 10%. If the annual CAM budget is $120,000, your share would be $12,000.
For a triple net (NNN) lease property owner, which we will discuss later in this article, the tenant pays for 100 percent of those charges as stated in the Lease. Most of the time, Triple Net (NNN) Lease tenants are national franchises such as Walmart, CVS, Walgreens, Starbucks, and Family Dollar.
Talk to a trusted advisor with SIG to calculate and discuss your CAM charges.
Can CAM Charges Be Negotiated?
Yes, but it depends on several factors. CAM charges typically fall into two categories: controllable and uncontrollable.
- Uncontrollable expenses include things like utilities, taxes, and insurance.
- Controllable expenses usually include the majority of property operating costs, such as maintenance, landscaping, janitorial, and administrative fees.
However, property taxes and insurance costs are not negotiable and fall under the uncontrollable category.
Tenants may negotiate:
- Exclusions (e.g., capital improvements, landlord salaries)
- CAM Caps to limit annual increases
- Audit rights to review actual costs
This is where having a good tenant representation broker is a must. The broker is often able to negotiate a cap on the percentage that a landlord can increase the common area maintenance charges year-over-year.
There are two types of CAM caps – cumulative or non-cumulative.
Cumulative caps are preferred by landlords as they give them the most flexibility in choosing what CAM charges will benefit their property. Example: If the landlord and tenant agree to a 3 percent cumulative cap, and CAM expenses increase by 2 percent in the first year, then the tenant would pay the 2 percent increase. If CAM expenses increase by 4 percent in the second year, then the tenant would pay a 4 percent increase. This is because, in addition to the 3 percent cap, the landlord can recover the 1 percent increase that went unused in the first year.
Non-cumulative caps are preferred by tenants as they allow them to budget and do not allow the landlord to recover any unused increases from the prior years. Example: If the landlord and tenant agree to a 3 percent non-cumulative cap, and the CAM expenses increase by 2 percent in the first year, then the tenant would pay the 2 percent increase. If the CAM expenses increase by 4 percent in the second year, then the tenant would pay for only the 3 percent increase.
Types of Leases For CAM Charges
Different lease structures determine how CAM charges are allocated between landlords and tenants. Below are the most common lease types and how they typically assign operating and CAM responsibilities:
Gross Lease: In a gross lease, the property owner is financially responsible for the building and covers all the expenses associated with its operation (including taxes, insurance, and maintenance). To help recoup some of these costs, the property owner builds them into the monthly rent amount that a tenant pays for use of the building. The property owner pays all of the expenses associated with the building, in exchange for a monthly, all-inclusive rent sum.
Modified Gross Lease: In a modified gross lease, the tenant is responsible for some (but not all) of the operating expenses of the property, but they still get to pay them as part of one monthly rent amount.
Net Lease or triple net (NNN) lease: In a triple net lease, the tenant absorbs all of the operating expenses and property costs into their own business in addition to monthly rent payments, such as property taxes, insurance premiums, maintenance, repairs, and upkeep.
Which Investment is Best When Dealing With CAM Charges?
Triple Net (NNN) properties provide investors with a relatively low-risk (and very low-touch) option for creating a consistent, long-term revenue stream.
Triple Net (NNN) properties are attractive because they offer predictable returns with minimal landlord involvement, as tenants typically cover operating costs and day-to-day management. Triple Net (NNN) investments are also a great way to build equity and add diversity to an investment portfolio.
As a result, many investors are shifting from high-touch property types (e.g., apartments) to low-touch Triple Net (NNN) assets, seeking passive income aligned with long-term strategies. In summary, Triple Net (NNN) investments are often viewed as “hands-off” opportunities for those who want to minimize property management responsibilities, avoid variable CAM charges, and secure predictable returns. However, not all net lease properties provide the same level of stability or return.
Investors considering NNN properties should understand the nuances of lease structures, tenant credit, and market conditions to ensure alignment with portfolio goals.
Reconciliation and Auditing CAM Charges
At the end of each fiscal year, landlords reconcile actual CAM expenses against the amounts billed to tenants. This reconciliation ensures tenants pay only their fair share, but it can also reveal unexpected or disputed expenses.
Best practices for tenants include:
- Requesting a detailed year-end CAM statement
- Comparing actual costs against projections
- Exercising audit rights (if negotiated) to review source invoices
FAQ: Common CAM Charge Questions
What are CAM charges in commercial real estate?
CAM charges are the fees billed to tenants to cover shared expenses such as security, landscaping, utilities, and general maintenance.
Can tenants dispute CAM charges?
Yes. Tenants may dispute CAM charges if discrepancies arise, particularly when audit rights are included in the lease.
Are CAM charges the same as rent?
No. Rent covers the right to occupy space, while CAM charges cover the shared operating expenses of the property.
Who determines CAM charges?
Landlords estimate CAM charges annually based on projected expenses, then reconcile against actual costs at year-end.
What happens if CAM charges are too high?
Tenants can review detailed statements, compare costs against market benchmarks, and—if allowed—exercise audit rights to dispute or adjust charges.
Why It’s Important to Understand CAM Charges?
CAM charges directly affect both a property’s net operating income (NOI) and the overall occupancy costs tenants must budget for. Failure to understand CAM charges can result in:
- Budgeting issues
- Unexpected year-end charges
- Unfair cost allocations
There is no universal standard for CAM inclusions. Lease terms vary significantly by landlord and by market, making transparency essential.
Tenants, working with their brokers, can use several strategies to mitigate the risk of unexpected CAM costs:
- Research comparable properties in the market
- Request the landlord’s CAM history
- Negotiate clear lease terms outlining CAM inclusions and exclusions
Because of these variations, understanding CAM charges remains one of the most challenging aspects of lease negotiations. CAM charges have a significant impact on the property’s NOI and the amount the tenant will pay to occupy the space. This is why CAM charges need to be clearly defined in the lease before signing.
CAM Charges and Triple Net Investments
For investors, CAM charges play a critical role when evaluating Triple Net (NNN) properties. This is because tenants in Triple Net (NNN) leases assume full responsibility for CAM charges, reducing the landlord’s operational burden.
Key benefits of Triple Net (NNN) investments include:
- Predictable income
- Minimal landlord duties
- Long-term stability
SIG Insight: Many SIG clients transition to Triple Net (NNN) investments to diversify their portfolios and create passive income streams.
Why Work With SIG
Sands Investment Group (SIG) is a leading commercial real estate advisory firm, specializing in helping private investors and institutions across the U.S. find, acquire, and sell investment properties. Since 2010, we’ve successfully closed over 5,500 transactions, totaling $10.5 billion in sales volume— and counting.
Looking for guidance on Triple Net (NNN) investing or clarity on CAM charges in your lease? Connect with a SIG advisor today: call 844.474.4666 or email info@SandsIG.com.
While CAM charges may seem like a small detail, they can become significant and unpredictable costs. Whether you’re a tenant or an investor, understanding them is key to protecting budgets, improving NOI, and making smarter real estate decisions.
