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2 reasons to negotiate lower CAM fees in a commercial lease

On Behalf of | Mar 7, 2023 | Firm News

Finding the right property can allow customers to start patronizing a new business quickly, but opening a physical location will also drastically increase an organization’s operating expenses. Any new commercial lease likely comes with several years of payment requirements.

In addition to the base rent amount, there will usually be additional fees assessed to commercial tenants. Those renting a space in a multi-unit building or development, like a strip mall or office complex, will likely have to pay common area maintenance (CAM) fees for the spaces that they share with the landlord and other tenants.

Although landlords often suggest a set fee or a specific percentage of the overall costs, tenants may want to try to negotiate those terms to arrive at a more favorable agreement. What are some of the reasons for a new commercial tenant to ask for concessions related to CAM fees?

1. They won’t have much customer traffic

Exactly how a landlord determines the percentage of CAM fees that each tenant pays can vary depending on the amenities provided. Often, the traffic in and out will be a major consideration.

The visitors at a retail storefront, for example, create parking and security demands. The less a business model relies on customer or client traffic, the lower the business’s demand concerning shared infrastructure will be.

2. They will have few or no employees

Much like customers, workers for commercial tenants are often expensive for commercial landlords. They use shared bathroom facilities and need someone working security to ensure they don’t end up mugged on their way to their car in the parking lot.

When an organization does not have many employees, that can reduce the utilities and other services required by the commercial tenant and could therefore help convince the landlord to reduce the CAM fees the tenant will pay. Any reason to believe that a business will place less demand on shared resources or require less support from the landlord could influence the appropriate amount of CAM fees.

Those who are focused on developing a business may have a hard time handling the negotiations often involved in securing a commercial lease. Seeking proper legal support can make it easier for entrepreneurs to review and negotiate commercial leases so that they can benefit from the most favorable terms possible.