What CAM charges are, how common area maintenance costs are split among tenants, which leases pass them on and how CAM is reconciled.
Common area maintenance (CAM) charges are tenants’ contributions to maintaining a building’s shared areas.
In multi-tenant buildings, these costs are usually split among tenants by the share of space each one occupies. How they are passed on depends on the lease; see net and gross leases in Colorado.
CAM is billed as additional rent, on top of base rent. This guide covers what CAM includes, how each tenant’s share is figured, how caps and fees work, and how the yearly reconciliation is checked.
What CAM Charges Cover
CAM pays for running the parts of a property that all tenants share. The exact list is negotiated in each lease, so it varies from building to building.
Common examples include:
- landscaping and grounds care;
- parking lot sweeping, striping, lighting and repairs;
- cleaning and portering of shared halls, lobbies and walkways;
- snow plowing and ice control;
- security for common areas;
- utilities for common areas, such as lot and hallway lighting;
- repairs and upkeep of shared systems.
Some costs are shared by every tenant. Others apply only to a group; in a mall, for example, cleaning the food court tables may be billed only to the food court vendors.
CAM versus the other nets
In a triple net lease, CAM is one of several pass-throughs, next to property taxes and building insurance. Depending on the lease, those may be billed as separate lines or grouped with CAM in one operating expense charge. Check which costs sit inside CAM and which sit outside it.
What tenants try to exclude
Landlords generally seek a broad definition of CAM so most operating costs pass through. Tenants generally seek a narrow one. A tenant may ask to exclude items such as major capital replacements, costs of leasing other space and the landlord’s loan payments. Repairs covered by insurance or warranties are another common request. The final list is whatever the two sides agree in writing.
How CAM Is Split
CAM costs are split by each tenant’s share of the leasable space.
As an illustration, a tenant with 2,000 of a building’s 10,000 square feet pays 20% of the CAM costs. Each tenant’s space is listed in the building’s records; see how a rent roll shows each tenant’s share.
The pro rata share formula
- Tenant’s pro rata share = tenant’s rentable square feet / building’s total rentable square feet.
- Tenant’s CAM = pro rata share x total recoverable CAM costs.
- Monthly estimate = tenant’s estimated annual CAM / 12.
Worked example
A Colorado strip center has 24,000 rentable square feet and a CAM budget of $144,000, or $6 per square foot. All figures are an illustration.
| Tenant | Square feet | Share | Annual CAM | Monthly estimate |
|---|---|---|---|---|
| Restaurant | 6,000 | 25% | $36,000 | $3,000 |
| Retail shop | 3,000 | 12.5% | $18,000 | $1,500 |
| Office user | 15,000 | 62.5% | $90,000 | $7,500 |
| Total | 24,000 | 100% | $144,000 | $12,000 |
If actual CAM for the year comes in at $156,000, the retail shop owes 12.5% of the extra $12,000, or $1,500, at reconciliation.
Which denominator the lease uses
The building total in the formula matters. The standard formula divides by the building’s total rentable square footage. If a lease divides by leased space instead, each tenant’s share rises when units sit empty, so read this definition closely.
Controllable and Uncontrollable Costs
CAM costs are often split into two groups.
- Uncontrollable: taxes, security, utilities and snow removal. The landlord cannot easily set these costs.
- Controllable: most other CAM items, such as landscaping, cleaning and repairs, where the landlord chooses vendors and service levels.
The split matters because caps usually apply only to controllable costs. Snow removal counts as uncontrollable, which is significant in Colorado mountain towns, where a heavy winter can raise the bill well above budget.
CAM Caps and Floors
A CAM cap limits how much the charges can rise each year. It is expressed as a percentage and negotiated lease by lease.
Caps come in several forms:
| Cap type | How it works |
|---|---|
| Year-over-year | The percentage applies to last year’s actual CAM |
| Year-over-base | The percentage applies to the first year’s base CAM |
| Cumulative | Unused increases carry forward, so a 5% cap can allow 10% by year two and 15% by year three |
| Compounded | The allowed increase grows at a compounding rate each year |
A cap has no effect in years when CAM rises less than the cap. Some leases also include a floor, a minimum yearly increase, which smooths costs for the landlord when inflation is expected.
For tenants, a non-cumulative cap on controllable costs gives the most predictable budget. For landlords, a cumulative cap preserves room to recover unused increases in later years.
Administrative and Management Fees
Many leases add a fee on top of the actual CAM costs. There are two common kinds.
- Administrative fee: a negotiated percentage of the operating and maintenance costs.
- Management fee: a percentage of gross rents collected, as defined in the management agreement.
The fee rate and the base it is charged on are both negotiable. A tenant should check that the fee is not charged on costs that are already excluded or capped.
Gross-Up in Partly Empty Buildings
A gross-up recalculates variable costs as if the building were fully occupied. It keeps the landlord from under-recovering costs, without charging occupied tenants for empty space.
Colliers gives an example: a building is 50% leased and spends $100,000 on variable costs. The costs are grossed up to $200,000, and the tenants, at 50%, pay $100,000, which equals the landlord’s actual cost.
Tenants should check that fixed costs, such as taxes and insurance, are not grossed up. Any base year or expense stop should be figured on the same basis.
Which Leases Pass CAM to Tenants
Triple net leases pass CAM costs to tenants, while double net leases leave them with the landlord. In a triple net lease, the tenant covers the repair and maintenance of common areas.
| Lease type | Who pays CAM |
|---|---|
| Gross / full service | Landlord, built into the rent; tenant may pay increases above a base year |
| Modified gross | Split as the lease defines |
| Double net (NN) | Landlord |
| Triple net (NNN) | Tenant, by pro rata share |
| Absolute NNN | Tenant |
In a triple net lease, CAM is sometimes negotiated up front as a fixed amount per square foot. A fixed CAM charge removes the yearly reconciliation risk for the tenant, while the landlord carries any overrun. How lease clauses define these costs is covered in the operating expense clause in a lease.
CAM Reconciliation
CAM is usually billed on estimates and then reconciled against the actual costs each year. Reconciling CAM recovers costs that owners otherwise lose quietly over the year. See how property managers reconcile CAM.
How the reconciliation works
- The manager sets a yearly CAM budget and bills each tenant a monthly estimate.
- After the year ends, the manager totals the actual recoverable costs.
- Any gross-up and cap are applied.
- Each tenant’s share is figured with its pro rata percentage.
- The tenant’s estimated payments are subtracted.
- The difference is billed to the tenant or credited back.
Reconciliations go by other names too: true-ups, recoveries or billbacks. The annual settlement is generally due 90 to 120 days after year-end, though the lease sets the exact timing.
Auditing a CAM statement
Leases typically give tenants the right to audit and challenge the landlord’s operating expense figures. A tenant reviewing a statement can check:
- that excluded items were left out;
- that the pro rata share and denominator match the lease;
- that caps were applied to controllable costs only;
- that the gross-up covers variable costs only;
- that the administrative or management fee uses the right rate and base.
Audit windows are set in each lease, so note the deadline as soon as the statement arrives.
Why reconciliation matters to owners
For landlords, CAM recoveries offset operating costs, so they support net operating income. A missed or late reconciliation leaves money uncollected; see how expense recoveries flow into NOI.
CAM in Colorado Mountain Towns
CAM in Colorado’s mountain and resort towns carries a few costs that flatland budgets often treat as minor.
- Snow removal: plowing, sanding and hauling snow can be a large, uncontrollable line in towns such as Steamboat Springs, Breckenridge and Telluride.
- Building wear: RMCRE’s Durango 2026 outlook notes that mountain weather accelerates building deterioration, which raises repair and maintenance spending.
- Property taxes: in NNN leases, taxes pass through alongside CAM. Colorado’s 2026 assessment rate is 25% for most commercial buildings, down from 27% in 2025.
- Tax timing: county treasurers set due dates. In Garfield County, the full year is due April 30, or in halves on the last day of February and June 15.
Tenants are paying closer attention. RMCRE’s Q1 2026 update for Steamboat Springs reports buyers pressing harder on operating expenses and looking closely at real tenant operating costs. All-in rents that include these pass-throughs are covered in all-in office rents across Colorado.
Reading a CAM Budget Before You Sign
The best time to manage CAM is before the lease is signed, while terms are still open.
- Ask for history. Request actual CAM statements for the last two or three years, not only this year’s budget.
- Check the trend. A sharp rise in one line, such as snow removal or repairs, may repeat.
- Read the definition. Compare the lease’s CAM list with the budget lines, and flag anything that looks like a capital project.
- Confirm the share. Recompute the pro rata share from the lease’s square footage figures.
- Look for caps and fees. Note the cap type, which costs it covers and the fee rate.
- Note vacancy. In a partly empty building, ask how the gross-up works.
- Get it in writing. Any promise about CAM belongs in the lease, not in an email.
Fixed CAM versus variable CAM
Some landlords offer a fixed CAM charge per square foot, sometimes with a set yearly increase. The tenant gains a predictable budget and skips the true-up. The landlord keeps any savings and carries any overrun. Variable CAM tracks real costs, so it can go down as well as up. The right choice depends on the building’s age, its cost history and the tenant’s tolerance for surprises.
Mistakes to Avoid
- Comparing base rents without CAM. Two NNN rents can carry very different CAM loads.
- Accepting an open-ended CAM definition. Without exclusions, capital projects can land in CAM.
- Missing the audit window. Leases often limit how long a tenant has to dispute a statement.
- Ignoring the denominator. Dividing by occupied space can shift vacancy costs to tenants.
- Budgeting only the estimate. Set aside money for a reconciliation bill after a heavy snow year.
Frequently Asked Questions
How much are CAM charges per square foot?
There is no standard figure. CAM depends on the property type, its amenities, local labor and climate, and what the lease includes. Ask the landlord for the last two or three years of actual CAM costs before signing.
Are CAM charges negotiable?
Yes. The definition of CAM, exclusions, caps, fees and audit rights are all negotiated before the lease is signed. Tenants with more leverage usually win tighter terms.
Do tenants pay CAM in a gross lease?
Usually not directly, because the landlord builds operating costs into the rent. Many full-service leases still pass through increases above a base year or expense stop.
What happens if CAM estimates were too low?
The tenant pays the shortfall at the annual reconciliation. If the estimates were too high, the landlord credits or refunds the difference.
Is snow removal part of CAM in Colorado?
Snow removal of shared lots and walks is usually a CAM item. It counts as an uncontrollable cost, so caps on controllable CAM do not limit it. The lease should say exactly who clears what.
CAM Accounting for Colorado Owners
RMCRE’s management accounting covers expenses, financial reports and CAM reconciliation. See RMCRE property management accounting.
Rocky Mountain Commercial Real Estate has brought together partner brokers across Colorado mountain towns since 2010. We help owners and tenants read CAM budgets and reconciliations against local costs.
