Calculating CAM

The landlord recoups the cost of maintaining corridors, restrooms, elevators, and other common areas through the common area maintenance charge (CAM). The CAM is calculated through either a loss or load factor. In the loss factor, tenants pay for more space than they actually get. In the load factor, tenants get the number of square feet advertised, but the space is more expensive.

For example, you rent a 750 square-foot studio space advertised at $10 per square foot. Under a loss factor, you might end up with only 700 square feet of usable space, with the additional 50 feet allocated as part of the common areas. Under a load factor, your usable space would be 750 square feet, but you would pay a higher rent to cover the 50 additional square feet of common area.

Say the 50 square feet of common space represents 15% of the overall common space. To cover this cost, you could expect the rent for the same space in a load scenario to be 15% higher, or more than if the cost had been based on a loss factor.

Normally, the square footage and cost per square foot advertised by landlords includes the loss or load factor. Every building has a different factor, depending upon design and layout and which method the landlord applies. The wider the corridors, and the larger the lobbies, the greater the impact the loss or load factor will have on your lease rate.

Ask your real estate professional or the landlord how the space is being measured, and the exact size of the offered space. Also, measure the actual space yourself.

TIP: Square footage can include the rented space plus a portion of the common area. Ask how much usable square footage you will be getting, and how much space you will be paying for.

TIP: For more information on commercial and industrial leasing, visit Nolo.com.