CAM Charge and Management Fees
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Member since 2019 · 1 post · 1 vote
6yHello Joel,
I am the same question as Karisa "If the tenant is paying a monthly CAM fee (which includes property management fees) and the property management company is charging 5% of gross income (which includes CAM), is the tenant being double charged? Even if so, is this standard?"
This is my point of view "to tenants I say that property doesn’t hire vendors and processes AP by itself and to property owners the CAM charges doesn’t collect themselves (same for Rent). Therefore, if we don’t make the effort to collect and account for the CAM charges the property owner has less income on the table. That explains why in my opinion is that CAM should be included to calculate the Property Management fee. But that is my opinion. I would like to find out the rule to calculate property management fee.
Looking forward to hear from you!
Daniela Ferguson
Chico CA
9 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes8y
For commercial retail properties 5% of gross rents is on the higher side of fees. Those are usually smaller centers. The larger you go up in center size the PM fee can come down to 3% in some cases.
CAM ( common area maintenance fees ) typically cover property taxes, landlord insurance, PM fees, maintenance to the building and service contracts.
Some tenants instead of a NNN leases have NN lease or a gross lease. What a tenants responsibility is with CAM and percentages will vary based on what is in the lease.
Some have CAM STOPS each year where the tenant pays only a certain amount and after that the landlord pays it. Some have a clause where they only pay a percentage of CAM for the space they occupy. Again it's all about the lease and what is in it.
Are you currently evaluating a property to buy, already own it, or are you a tenant with a business in a center?
- Member since 2019 · 1 post · 1 vote6y
Hello Joel,
I am the same question as Karisa "If the tenant is paying a monthly CAM fee (which includes property management fees) and the property management company is charging 5% of gross income (which includes CAM), is the tenant being double charged? Even if so, is this standard?"
This is my point of view "to tenants I say that property doesn’t hire vendors and processes AP by itself and to property owners the CAM charges doesn’t collect themselves (same for Rent). Therefore, if we don’t make the effort to collect and account for the CAM charges the property owner has less income on the table. That explains why in my opinion is that CAM should be included to calculate the Property Management fee. But that is my opinion. I would like to find out the rule to calculate property management fee.
Looking forward to hear from you!
Daniela Ferguson
Chico CA
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes6y
Property management for retail is typically and expense grouped in with overall CAM. You have controllable and non-controllable costs and cumulative and non-cumulative CAM costs if any depending on what is written into each individual lease. Some leases are heavily in landlords favor, others the tenant, and other more neutral in the middle.
A landlord can have expenses that are only partial or not reimbursed by the tenants. We call this (leakage). You might have center operating costs of 100,000 but only 88,000 is recoverable. So you have to factor as a buyer market vacancy, reserves per foot, and any leakage into your numbers to get at a reasonable NOI and not what is usually listed on the offering memorandum pro-forma.
What is customary to be paid by tenants varies by what is negotiated.
- Property Manager · Minneapolis, MN · Member since 2014 · 380 posts · 167 votes6y
The way I read this question is if the % of property management fees are the gross income minus CAM fees or the Gross Income plus CAM fees? Should CAM should be treated as something outside of the normal PM fee? As a PM that is new to office etc. I am curious myself :-).
- Investor · San Jose, CA · Member since 2019 · 4 posts · 0 votes6y
From what's laid out in the question, the tenant is being double charged. In a NNN lease the tenant is paying the PM fee unless it specifically excluded. The PM is going to make the simple calculation of monthly total gross rent x 5%, which will include the CAM. This also hints that there are two easy ways to fix this double counting. Either limit the PM fee to 5% in the lease contract or exclude NNN fees from the agreement with the PM company. The second option is better for several reasons. It avoids landlord paying PM for pass through costs, can be done with once instead repeately if there's more than one tenant, and service agreements are much easier to modify than leases. Lastly, i agree that 5% is on the high end and should be fixed (if you're the landlord.)
- Appraiser · Richmond, VA · Member since 2017 · 48 posts · 41 votes6y
The situation you are describing doesn't sound uncommon. NNN tenants will typically reimburse management fees and the reimbursement income is factored into determining your effective gross income (EGI). Management fees are determined by multiplying the EGI by the management fee percentage. So this creates kind of a circular reference but your tenant isn't being double charged.
Its also not uncommon for NNN tenants to not reimburse management fees but instead to reimburse all other expenses + a mark up (say 10% to 15%) to avoid the circular reference calculation and to make the terms easier to understand
- Property Manager · Calabasas, CA · Member since 2026 · 141 posts · 67 votes5mo
Whether property management fees belong in CAM depends almost entirely on how your leases define the CAM pool — this is a classic drafting issue that bites a lot of first-time commercial landlords.
The short answer: a properly drafted NNN or modified gross lease should exclude property management fees from the CAM reimbursement pool. The tenant is paying you to manage the property. Charging them for the cost of managing it too is double-dipping, and most experienced tenants or their attorneys will push back hard.
That said, I've seen plenty of older leases — especially single-tenant strip centers from the 80s and 90s — where the original drafting was sloppy and management fees snuck into the CAM definition. If the lease language says something like "all costs of operating, maintaining, and managing the property" without specifically excluding management fees, you may have some latitude, but I'd expect a tenant to dispute it.
What's your lease say specifically? The language in the CAM definition and the exclusions list is where this lives or dies. If you don't have a clear exclusion, worth having an attorney look at it before you issue the year-end reconciliation.
- Property Manager · Calabasas, CA · Member since 2026 · 141 posts · 67 votes5mo
Whether property management fees belong in CAM depends almost entirely on how your leases define the CAM pool — this is a classic drafting issue that bites a lot of first-time commercial landlords.
The short answer: a properly drafted NNN or modified gross lease should exclude property management fees from the CAM reimbursement pool. The tenant is paying you to manage the property. Charging them for the cost of managing it too is double-dipping, and most experienced tenants or their attorneys will push back hard.
That said, I've seen plenty of older leases — especially single-tenant strip centers from the 80s and 90s — where the original drafting was sloppy and management fees snuck into the CAM definition. If the lease language says something like "all costs of operating, maintaining, and managing the property" without specifically excluding management fees, you may have some latitude, but I'd expect a tenant to dispute it.
What's your lease say specifically? The language in the CAM definition and the exclusions list is where this lives or dies. If you don't have a clear exclusion, worth having an attorney look at it before you issue the year-end reconciliation.
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