Business leaders look for facilities based on amenities and location, as well as price. In addition to the rent that they pay, commercial tenants often need to cover maintenance expenses. They either do so directly by taking responsibility to maintain the space or indirectly by paying the landlord for maintenance services.
One of the systems for covering maintenance costs involves assessing a common area maintenance (CAM) fee. Tenants pay monthly toward the cost of maintaining shared spaces in a multi-unit facility. Understanding those obligations can help business leaders budget effectively.
There is more than one type of CAM fee
Some landlords collect a flat CAM fee. The CAM fees that they impose are a set amount that they collect each month. That amount covers the cost of maintenance professionals, security services and other shared amenities, such as parking lots.
Other landlords have much more flexible and unpredictable CAM fee arrangements. They require that tenants pay a certain percentage of the total maintenance costs each month. Those costs could fluctuate wildly, especially if the landlord decides to complete a major project, such as resurfacing the parking lot.
In some cases, business leaders may be in a position to negotiate the fees imposed. If they can show that the business should generate less wear and tear than the businesses run by other tenants, then a landlord might agree to reduce their fees. Particularly in a variable fee arrangement, tenants may need to clarify matters to protect against shocking and sudden surges in the monthly amount they must pay.
Business leaders should review commercial leases carefully with a skilled legal team to better ensure that they don’t agree to unfavorable terms. Understanding the financial implications of CAM fees can help ensure that rental space does not overwhelm a company’s budget.
