Common Area Maintenance, or CAM, applies to most commercial leases that involve shared space. Whether you already own a net lease property or you are new to NNN lease investment in 2026, a clear grasp of CAM reconciliation helps you separate a well-run asset from one that carries hidden cost. This article covers what CAM charges include, how landlords calculate them, and how CAM reconciliation changes shape across lease types.
What Are Common Area Maintenance (CAM) Charges?
When you buy a commercial real estate property that is leased to one or more tenants, either the landlord or tenants need to pay the Common Area Maintenance (CAM) charges. CAM reconciliation is an accounting of CAM charges that may be performed at the end of the year to “reconcile” actual charges. Depending on the ownership structure of your property’s lease, including a triple net (NNN) lease properties, CAM charges must be clearly defined in the lease and paid for by either the landlord or the tenants.
Common Area Maintenance (CAM) charges cover the operating cost of the shared portions of a commercial property, such as parking lots, outdoor lighting, landscaping, and similar common spaces. These charges sit apart from base rent, and a lease defines which items count.
CAM charges for Commercial Real Estate can apply to:
- Sewer, plumbing, electrical maintenance
- Snow removal
- Trash removal
- Janitorial and pest control services
- Security
- Insurance, including liability insurance
- Real estate taxes
- Center signage
- Common area utilities
- Common area HVAC maintenance and HVAC replacement
- Landlord’s administrative or property manager costs
- Reserve funds
- Capital expenditures like repaving a parking lot
- System depreciation
As you view properties, you can download our CAM Checklist here.
How Landlords Calculate CAM Fees
CAM charges follow a tenant’s pro-rata share of a building, calculated by dividing a tenant’s occupied square footage by total building square footage. A buyer new to a property with no CAM history should expect the landlord to estimate CAM fees from utility bills, contractor quotes, and comparable properties, then add a buffer for inflation and unforeseen repair.
At year-end, the landlord compares actual CAM cost against the total collected from tenants throughout the year. A shortfall gets billed to tenants as an added charge. A surplus gets refunded or credited toward the following year. This process, called CAM reconciliation, keeps the estimate honest over time.
If you’re purchasing an existing property with CAM charge records, you can forecast the CAM charges that could face a property in a given year by looking at the last 3-5 years of CAM expenses and choosing the highest amount. That way, your tenants can budget the additional expense and you’ll have an easier time collecting those funds. If the actual amount ends up being less than anticipated, you can provide your tenants with a credit or a refund for the difference.
Once you have collected the estimates, raise the numbers a bit in order to account for unseen costs due to inflation or unforeseen repairs or maintenance.
If you purchase a new property without previous CAM, then determining CAM takes intentional effort on your part. We recommend you contact utility companies to source bill estimates for prior years. Many utility companies will, in fact, have a yearly summary of utility usage divided monthly for easy comparison. In addition, you should request estimates from key contractors (e.g. security systems, landscaping, snow removal, trash removal, window washing, HVAC maintenance, etc.). Invite them onsite so they can provide you with an estimate on their services for your property.
Controllable vs. Uncontrollable CAM Expenses
CAM expenses split into two categories. 1) Controllable expenses and 2) uncontrollable expenses
Controllable expenses, such as ground maintenance, security, and administrative salaries, stay fixed regardless of occupancy or usage. As owner of a traditional multi-unit residential property you would need to address this common area maintenance for the entire premises, regardless of vacancies or lease exclusions.
Uncontrollable expenses, such as utility cost, HVAC maintenance and repair, and building system upkeep, vary with occupancy and use.
Many leases cap the annual increase on controllable CAM expenses, often in the 5%-10% range, while uncontrollable expenses pass through without a cap. A buyer who understands this split can spot a lease that shifts more risk toward the tenant or more risk toward the landlord.
CAM vs. Capital Improvements: What’s the difference?
CAM covers routine, recurring maintenance of shared space. It does not cover capital improvements, such as a complete roof replacement, a parking lot repave, or a new HVAC system, since these add value or extend useful life of the property rather than restore current condition. Our article on commercial property improvement in 2026 walks you through how this distinction affects tax treatment and who pays for major capital costs under different lease types.
CAM Charges Across Lease Types
CAM responsibility shifts with lease type.
In a gross lease, also called a full-service lease, the tenant pays a lump sum that is all-inclusive. This includes charges for things such as janitorial services, electricity, insurance, property taxes, and parking lot services. The tenant pays a higher amount per square foot, which allows the tenant to estimate costs. The landlord may also save money since it is easier and cheaper to assess and analyze the tenant’s CAM expenses.
The gross lease setup is flexible. For example, as a landlord, you can choose to exclude costs such as janitorial services and some utilities. You can also charge tenants more for overuse of common areas. This would then be termed a modified gross lease.
Types of gross lease properties with complex CAM
- Multi-tenant buildings
- Industrial warehouse facilities
- Office complexes
- Apartment complexes
- Retail centers
In a double net (NN) lease, the tenant covers a pro-rated share of CAM and insurance while the landlord retains roof and structure duty. NN leases require the landlord to pay only some maintenance costs, like roof, structure, and parking lot maintenance, while the tenant pays prorated property insurance, and CAM. The NN leases with minimal landlord costs can sometimes be referred to as “modified triple nets” or “non-absolute NNNs”.
NN Lease and NNN Properties with minimal CAM
- Fast-food restaurants
- QSRs
- Child care assets
- Early learning centers
- Medical facilities
- Car washes
- Industrial
- Office complexes
In an absolute NNN lease, the tenant covers 100% of CAM, taxes, and insurance, and the landlord holds zero maintenance responsibility.
Absolute triple net lease properties with no CAM
- Fast-food restaurants
- QSRs
- Dollar stores
- Medical facilities
- Drug stores
- Gas stations
- Convenience stores
- Auto parts stores
- Child care assets
- Early learning centers
- Car washes
- Some industrial properties.
High-credit tenants such as Dollar General, 7-Eleven, and Starbucks often sign leases where CAM sits with the tenant alone, and the same holds for many AutoZone and O’Reilly auto parts locations, where roof and structure often stay with the landlord but CAM, tax, and insurance pass to the tenant.
Why Many NNN Buyers Choose to Skip CAM Management Altogether
Not every investor wants to track CAM cost, chase reconciliation, and negotiate expense caps year after year. If you already own a property with a complex CAM structure, or you plan to buy your first NNN asset in 2026, an absolute NNN property offers a straightforward alternative: one tenant, one lease, and one check each month without a CAM ledger to manage. This approach also fits well within a diversified NNN lease portfolio, where multiple absolute NNN assets each carry the same low CAM burden across sectors like auto parts, dollar stores, and quick-service restaurants.
A 1031 exchange offers one path from a CAM-heavy property into an absolute NNN asset while deferring federal capital gains tax. Our article on how a reverse 1031 exchange works in 2026 covers the version of this trade built for buyers who find a replacement property before they sell the one they hold now.
Frequently Asked Questions About CAM Reconciliation
What is CAM reconciliation?
CAM reconciliation is the process a landlord uses to compare estimated Common Area Maintenance charges collected from tenants during the year against actual CAM cost, then bill or refund the difference.
Who pays CAM charges in a NNN lease?
In an absolute NNN lease, the tenant pays 100% of CAM charges along with taxes and insurance. In a double net (NN) lease, the tenant covers most CAM costs while the landlord retains responsibility for the roof and structure. In a gross lease, the landlord absorbs CAM cost as part of one all-inclusive rent payment.
How often does CAM reconciliation happen?
Most commercial leases call for CAM reconciliation once a year, often within 90 to 120 days after the fiscal year ends, though an individual lease can set a different schedule.
What is the difference between CAM and a capital improvement?
CAM covers routine, recurring maintenance of shared space, such as landscaping or snow removal. A capital improvement, such as a full roof replacement or a new HVAC system, adds value or extends useful life and gets funded apart from CAM in most leases.
Can a tenant dispute a CAM reconciliation?
Yes. Many commercial leases include audit rights that let a tenant review a landlord’s CAM records and challenge a reconciliation within a set window after the statement arrives.
Does an absolute NNN lease include CAM charges?
Yes, but the tenant covers them without landlord involvement. An absolute NNN lease places 100% of CAM, tax, and insurance cost on the tenant, so the landlord holds no CAM responsibility at all.
Bring Your CAM Questions to a Westwood Advisor
CAM charges and reconciliation carry real weight in the total cost of a commercial property, whether you already own one or plan to buy your first this year. Our full breakdown on CAM reconciliation due diligence covers the specific documents and red flags worth a second look before you close in 2026, and our step-by-step guide to NNN investing walks through the rest of the buying process from search to closing.
Contact a Westwood Net Lease Advisor today for a no-obligation conversation at 314-997-5227. Our buyer representation comes at no cost to you, from the property search through closing.
