CRE glossary
Common area maintenance (CAM)
CAM (common area maintenance) is the operating-cost category in a commercial lease covering shared building areas: lobbies, parking lots, landscaping, security, common-area HVAC, janitorial, and management. Tenants pay their pro-rata share, billed monthly with an annual reconciliation against actuals.
CAM is the largest pass-through line for most NNN tenants and the one with the most legitimate dispute potential. Where property tax and insurance are easy to verify (you can see the bill), CAM is a category landlords compose internally. Bad CAM clauses let landlords classify roof replacements, parking-lot resurfacing, or HVAC chiller swaps as 'maintenance', capital projects that should be amortized over their useful life rather than billed in one year.
Brokers structure two protections into modern leases: a CAM cap (annual percentage increase ceiling, typically 4–6% on controllable costs) and exclusions of specific high-risk categories. Excluded categories usually include capital improvements, building structure, depreciation, leasing commissions, and any expense that benefits a specific tenant rather than the building as a whole.
Annual CAM reconciliations should be received within 90 days of year-end. The tenant has audit rights, typically 60-180 days from receipt, to challenge specific line items. Use it. CAM disputes are how brokers earn their commission on the back half of a lease.
Example
- Janitorial / cleaning
- $1.20/SF
- Parking + grounds
- $1.80/SF
- Common HVAC
- $2.00/SF
- Security
- $1.40/SF
- Management fee (3%)
- $1.20/SF
- CAM total
- $7.60/SF
Broker perspective
Always request three years of historical CAM in due diligence. The trend matters more than the latest year. A landlord whose CAM has grown 8% per year for three years is signaling sloppy operations or active gouging. Either way, you cap it at 4% controllable and walk if they refuse.
Frequently asked
People also ask
Are real estate taxes part of CAM?
No. Property tax is a separate pass-through line in NNN structures. CAM, taxes, and insurance are the three N's; each is calculated separately.
What's a CAM cap?
A negotiated ceiling on year-over-year increases in controllable CAM expenses (typically 4–6%). Uncontrollable items, utilities, taxes, insurance, are usually exempt.
Can capital expenditures be in CAM?
They shouldn't be. Negotiate exclusions for capital, structural, and any expense over a defined threshold ($25k+) without amortization. Push back hard if the landlord won't agree.
Who audits CAM?
The tenant. Most leases give 60–180 days post-reconciliation to dispute. Use a CRE accountant, first audit on a multi-floor lease usually pays for itself.
Related terms
Triple net lease (NNN)
A lease where the tenant pays base rent plus their pro-rata share of property taxes, insurance, and CAM.
Operating expenses (OpEx)
All costs to run the building, taxes, insurance, utilities, janitorial, management, that get passed through to tenants in NNN and modified gross structures.
Expense stop
The base year operating-expense level in modified gross leases, tenant pays only increases over this floor.
Modified gross lease
A hybrid where the landlord covers some operating expenses in base rent and passes through others, middle ground between full-service and NNN.
See common area maintenance (cam) extracted from a real lease.
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