What are CAM Fees?

In commercial real estate, Common Area Maintenance (CAM) charges are important for both landlords and tenants.

Here’s what you need to know about it now!

What is CAM?

Common Area Maintenance (CAM) refers to the costs of maintaining and operating shared areas in a commercial property, such as lobbies, hallways, elevators, parking lots, landscaping, and shared facilities like restrooms or fitness centres. Tenants often pay fees in addition to their base rent.

CAM Fees in Leases

These are often negotiated in commercial leases. When renting space, tenants might have to pay a share of the fees, which can vary widely depending on the lease agreement.

How CAM Fees are Calculated?

The calculation of typically involves the following steps:

• Tenants pay fees based on the amount of space they lease. The more space they occupy, the higher their fee.

• Landlords add up all eligible fees for a given period (usually a fiscal year). These expenses include management fees, landscaping, utilities for common areas, janitorial services, and repairs.

• At the start of the lease term, fees are estimated based on expected costs. After the fiscal year, landlords compare the estimated fees with actual expenses. 

• Some leases include caps on the annual increase of CAM fees to help tenants avoid large, unexpected cost increases.

What Does Common Area Maintenance Fees?

What are maintenance fees covering various expenses related to the upkeep and operation of shared spaces? These can include:

• Costs for services, such as salaries, administrative expenses, and management fees.
• Expenses for utilities in common areas like electricity, water, gas, and sewer.
• Costs for outdoor areas, including lawn care, tree trimming, and landscaping.
• Expenses for cleaning common areas like hallways, restrooms, and lobbies.
• Repairing shared elements, including HVAC systems, elevators, and parking lots.
• Costs for security services and systems that protect the property and its tenants.
• Expenses for common area insurance, covering liability and property insurance.
• Some leases include property tax expenses as part of CAM fees.

Review Your Lease Agreement Carefully

When renting commercial space, tenants must review the lease agreement closely, especially the sections about CAM fees. It’s important to understand how CAM charges are calculated, what they cover, and how often they are reconciled.

Negotiating CAM Charges

During lease negotiations, tenants can try to limit CAM charges or cap the annual increase. This helps keep costs predictable and prevents unexpected increases.

CAM vs. Operating Expenses

While CAM charges and operating expenses are both related to property upkeep, they are different:

CAM Charges

These cover the maintenance and operation of shared areas, like lobbies, hallways, and parking lots. CAM fees are usually billed separately from the base rent and shared among tenants based on the amount of space they lease.

Operating Expenses

These include broader costs for running the entire property, both shared and tenant-occupied areas. This can include property taxes, insurance, and building-wide utilities. Operating CAM fees might be included in the base rent or listed as a separate charge.

CAM Considerations in Lease Accounting

CAM fees are important in lease accounting, especially under ASC 842:

• Lessees must recognize the total lease expense, including CAM charges, 
• CAM charges should be recorded as separate expenses from base rent.
• CAM fees are estimated at the start of the lease and adjusted annually.
• Including CAM charges in the lease liability affects financial ratios and metrics.
• CAM fees are recognized as expenses, impacting net income and other metrics.

CAM Fees in Phuket 

The common area fee, or CAM fees, is a monthly charge that every condo owner pays for maintaining shared spaces. The fee is based on the size of each unit, so larger units pay more. Understanding CAM fees in property maintenance like security, swimming pool, gym, gardens, elevators, and walkways. They also cover electricity for common area lighting, air conditioning, and other expenses like window cleaning.

In Phuket, these fees range from 40 to 80 Baht per square metre per month, with the average being around 50 Baht. A low maintenance fee might seem appealing, but it could indicate poor property management. For example, if you own a 60 square metre condo in Patong with a fee of 50 Baht per square metre per month, your monthly fee would be 3,000 Baht. Annually, this totals to 36,000 Baht.

OurVillas is a property management company located in Phuket, Thailand. We help property owners take care of their villas and vacation rentals. Whether it’s cleaning, maintenance, or handling guest bookings, OurVillas makes sure everything runs smoothly.

Frequently Asked Questions