Common area maintenance, commonly abbreviated CAM, refers to the costs of operating and maintaining the shared spaces of a retail or commercial property, including parking lots, landscaping, lighting, sidewalks, and shared utilities. In most commercial leases, tenants reimburse the landlord for their proportional share of these expenses in addition to base rent, based on each tenant's leased square footage relative to the property's total gross leasable area. CAM charges can be structured as a fixed annual amount, an estimated payment reconciled against actual costs at year-end, or fully variable based on actual expenses incurred. Because CAM directly affects a tenant's total occupancy cost, lease negotiations often include caps on annual CAM increases or carve-outs excluding capital expenditures from reimbursable costs. For property owners, accurately budgeting and billing CAM is essential to protecting net operating income, since underestimated or unrecovered common area costs erode profitability even when base rent collections remain strong.
Further reading: Real Estate Investment Strategies for Accredited Investors in 2026
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