Legal Advice During Challenging Times

Are CAM fees negotiable?

On Behalf of | Jun 5, 2024 | Real Estate Law |

Commercial leases tend to be more complex and have more unique variables than residential leases. Business professionals looking to sign a new lease or renew an existing one need to look carefully at the terms included in the lease. 

For example, in commercial leases, the document needs to describe who is responsible for maintenance. If a business owner or entrepreneur rents one unit in a shared complex, the landlord likely handles most maintenance matters. They then pass those costs on to the tenant in the form of common area maintenance (CAM) fees. 

Those fees could significantly increase the monthly rent due for a commercial space. Can tenants negotiate CAM fees before signing a lease? 

Some tenants could reduce their CAM fees

Commercial landlords tend to employ a relatively straightforward formula when calculating CAM fees. They look specifically at the size of the rented unit as a percentage of the overall space. In cases where one tenant might use shared amenities, like the parking lot, far less than other businesses, it could be possible to negotiate a reduction in CAM fees. 

Tenants may have to agree to certain additional terms in a lease, such as communicating with the landlord if they hire more employees. It could also theoretically be possible to negotiate fixed-rate CAM fees in some scenarios where landlords might typically charge a varying fee from one month to the next. 

A commercial lease typically lasts for multiple years, making the negotiation of reasonable terms critically important for a business acquiring new space. Identifying factors that influence the cost of the lease may help those preparing to negotiate and sign a new rental agreement for commercial space.