Aug 22nd, 2018, By

What To Know About the Common Area

When you're considering how much it will cost to lease a space in an office building, you must look beyond the office space that you plan to occupy. You'll also be responsible to pay Common Area Maintenance or CAM for the right to use shared areas in the building. Read on to learn more about CAM and how to evaluate it.

 

What Is the Common Area?

Common areas in an office building are spaces outside of your office space that your company can use. They include hallways, elevators, public restrooms, lobbies, reception areas, shared conference rooms and other common spaces.

 

Why Do You Pay CAM?

Common area maintenance or CAM is assessed to tenants to help cover the costs of maintaining the common areas in a building. The landlord can use the proceeds to pay for janitorial services, utilities, maintenance and decorating costs. Normally, the common areas account for about 12 to 20 percent of the building's total square footage.

 

How Is CAM Determined?

To determine CAM fees, landlords use the common area factor or load factor. This number represents the shared spaces in the building. Often, landlords will use two common area factors:

 

- Floor Common Area Factor: represents the common areas on the floor or floors that you occupy and is usually a higher rate

 

- Building Common Area Factor: represents common areas accessible to all tenants in the building

 

Once the common area factor is determined, the landlord calculates your total rent with CAM included by multiplying the amount of usable square footage that you are renting in your office space by the load factor. The result is referred to as your rentable square footage.

 

How Can I Make Sure That My CAM Rate is Fair?

To evaluate CAM, do the following:

  1. Ask the landlord what the load factor is and how it was calculated. Your prospective landlord should be able to clearly explain how the figure was arrived at.

  2. Get a clear definition of what common areas are included. The common areas that are included in your CAM should be spelled out clearly in your lease, guaranteeing that you have a right to access them.

  3. Read the lease carefully. Make sure that the language in the lease agreement reflects the CAM and rentable square footage that the landlord verbally quoted you.

  4. Do the math. Use the determined load factor and the usable square footage of your prospective office space to determine the rentable square footage. Then, multiply the rentable square footage by the rental cost per square foot. Make sure that the numbers match what's stipulated in your lease. 

  1. Enlist the help of a tenant rep broker. A tenant representative is a valuable asset when evaluating CAM costs. With their knowledge of the market and experience representing tenants, they can tell you if the load factor is competitive with those of similar buildings in the area and help you correctly double check the landlord's math. If the CAM is unfair, the rep broker can give you an edge when negotiating a better rate.

 

Here are a few other articles you might enjoy:

7 Tips Before Leasing Office Space

Commercial Office Leasing Checklist

Why Having a Tenant Rep Is Important in CRE

 

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