CAM Charges

CAM charges, or Common Area Maintenance charges, are fees paid by tenants to landlords to help cover the costs associated with upkeep and improvement of common areas in a commercial property. Common areas can include hallways, lobbies, restrooms, parking lots, elevators, and any other shared spaces that are available for use by all tenants.

CAM charges are often found in "triple net" leases (NNN leases) where the tenant is responsible for a share of property taxes, insurance, and CAM. They can also be found in "modified gross" leases where some operating expenses are included in the base rent, and others (like CAM charges) are billed separately.

The specific items included in CAM charges can vary, but they typically include things like:

Landscaping and outdoor maintenance

Cleaning and janitorial services for common areas

Utilities for common areas

Security services

Snow removal (in applicable climates)

Repairs and maintenance for common areas

Management fees

The amount each tenant pays is usually proportionate to the amount of space they lease compared to the total leasable space in the property.

In a real estate financial model, CAM charges contribute to a property's income. However, since they are offset by the actual costs of maintaining the common areas, they typically have a net neutral effect on net operating income and cash flow. As such, landlords need to accurately estimate these costs and set CAM charges appropriately to ensure they're covered.