The short answer CAM (common area maintenance) charges are the shared costs of running a multi-tenant property, such as parking lot upkeep, snow removal, landscaping and management. You pay your pro rata share: your square footage divided by the building's total square footage.
You lease 2,500 SF in a 20,000 SF building. Pro rata share = 2,500 ÷ 20,000 = 12.5%.
The landlord budgets $90,000 for the year in taxes, insurance and CAM.
Your share: $90,000 × 12.5% = $11,250 per year ÷ 12 = $937.50 per month.
Check: $90,000 ÷ 20,000 SF = $4.50/SF, and $4.50 × 2,500 = $11,250.
What usually counts as CAM?
Parking lot repair and sweeping, snow removal, landscaping, exterior lighting, common utilities, repairs to shared building systems and a property management fee. Taxes and insurance are often billed alongside CAM; together they are the "NNN" in a triple net lease.
How does CAM reconciliation work?
You pay a monthly estimate during the year. After year end, the landlord totals the actual costs and settles up with each tenant.
Actual costs come in at $96,000 instead of the $90,000 budget.
Your actual share: $96,000 × 12.5% = $12,000.
You paid in estimates: $11,250.
Reconciliation bill: $12,000 − $11,250 = $750.
What is a cap on controllable expenses?
A cap limits how much controllable costs (management, landscaping, snow removal, repairs) can rise each year. Taxes, insurance and utilities are usually excluded.
Controllable expenses are $40,000 in year 1, with a 5% annual cap.
Year 2 cap: $40,000 × 1.05 = $42,000. Actual year 2 controllable costs: $46,000.
Your share with the cap: $42,000 × 12.5% = $5,250. Without it: $46,000 × 12.5% = $5,750.
The cap saves you $500 that year.
Caps can be cumulative (unused increases carry forward) or non-cumulative (they do not). Non-cumulative is better for the tenant.
How this affects your lease
- Confirm the denominator: whole-building square footage, not just leased space, so vacancies are not passed to you.
- Ask for two years of actual CAM history before signing.
- Negotiate a cap on controllable expenses and exclusions for capital replacements.
- Get an audit right with a reasonable window after each reconciliation.
- Build CAM into your all-in monthly cost; see how to calculate commercial rent.
Goff CRE Group, brokered by Nassar Realty, reviews CAM language as part of our tenant representation work. The commercial lease checklist covers the other clauses to review.
