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How landlords can recoup costs for shared commercial amenities

On Behalf of | Oct 16, 2023 | Real estate transactions

Landlords renting out commercial properties either rent out an entire facility to a single tenant or may have multiple professionals and businesses occupying a space. Shared spaces can be very efficient because they do not require a bunch of redundant facilities. Multiple single professional offices can all share the same parking lot, security services and bathrooms, for example.

Of course, those shared spaces mean that a landlord has to absorb more costs related to facility maintenance. They usually pass those costs onto their tenants instead of reducing their profit margin for the property. How do landlords with multiple tenants at a single property recoup the costs related to shared amenities?

Assessing certain fees as outlined in the lease

A landlord with multiple tenants in a single building can charge tenants common area maintenance (CAM) fees. Usually, landlords either set a fixed amount for those fees each month or negotiate to have individual tenants cover a specific percentage of the costs for those shared amenities.

Occasionally, tenants can negotiate to reduce how much they have to contribute toward those expenses. Those that will have less traffic into the business or fewer employees could potentially justify covering less of those costs because they will use those shared amenities less frequently. Tenants who fall into arrears on their CAM fees could face the same kind of collection efforts as those who do not pay their rent as they should.

Negotiating an appropriate division of maintenance fees can be an important part of establishing a lease agreement for commercial property for both a tenant and a commercial landlord.