CAM

CAM is the pass-through mechanism at the center of most retail and multi-tenant office/industrial leases: landscaping, parking lot repair and striping, common-area utilities and lighting, snow removal, and often a management fee are billed to tenants pro-rata based on their share of the building's leasable area. In a full NNN structure, CAM sits alongside taxes and insurance as the three components tenants reimburse.

The negotiation that matters is the CAM cap and the exclusions list, not the CAM structure itself — a tenant without a cap on annual CAM increases (commonly 3–5% year-over-year, compounding or non-compounding) has effectively uncapped operating cost exposure, and "capital expenditure" items like roof replacement or parking lot reconstruction should be explicitly excluded from a tenant's CAM obligation unless the lease says otherwise.

For a landlord marketing a multi-tenant investment property, a clean CAM reconciliation history (no material year-end true-ups, no disputed charges) is a real underwriting positive; a buyer's diligence should include the last 2–3 years of CAM reconciliations, not just the pro forma.