When leasing space in a medical office building, one of the most important aspects to consider is the Common Area Maintenance (CAM) charges. CAM charges cover the shared costs associated with maintaining and operating common areas in the building, such as lobbies, hallways, parking lots, elevators, and utilities. 

For both landlords and tenants, conducting a thorough CAM review is crucial to ensure that these expenses are fair, transparent, and in line with the terms outlined in the lease agreement. A comprehensive CAM review can help prevent overcharging, avoid disputes, and ensure that the costs associated with shared spaces are properly allocated.

What are CAM Charges?

In a medical office lease, CAM charges typically refer to the costs for maintaining and operating the common areas of the property. These areas can include shared spaces that tenants use, such as:

• Lobbies and Waiting Areas: The entrance and reception areas shared by all tenants.
• Hallways and Corridors: Shared passageways that lead to individual medical office spaces.
• Elevators: Shared transportation within the building.
• Parking Lots: Common parking areas for staff, patients, and visitors.
• Shared Utilities: Utilities such as water, heating, and cooling that serve the common areas.

In the context of medical office buildings, CAM charges can also include specialized maintenance expenses that are more relevant to healthcare settings, such as cleaning and disinfecting services. The specific costs associated with maintaining these spaces can vary significantly based on factors like the size of the building, its location, and the types of services provided.

Why Are CAM Reviews Important?

For both medical tenants and property owners, CAM reviews are essential for several reasons:

1. Fair Allocation of Costs: CAM charges should reflect the actual costs of maintaining common areas. Both landlords and tenants should ensure that the allocation of these costs is fair and consistent with the lease agreement.
2. Verification of Lease Compliance: Tenants should review the CAM charges to ensure they align with the terms outlined in the lease. Sometimes, charges may be assessed incorrectly, leading to overpayment or underpayment for maintenance services.
3. Specialized Maintenance Needs: Medical offices often require more specialized maintenance compared to other types of commercial spaces. For example, cleaning and sanitation protocols may be stricter in medical office buildings due to patient safety concerns. CAM reviews ensure that these specialized expenses are accurately reflected in the charges.
4. Identifying Discrepancies: By reviewing the CAM charges regularly, medical tenants can identify any discrepancies or overcharges that may occur. If the landlord is passing on costs that should not be included in the CAM calculation, the tenant can challenge these charges before they become a larger issue.
5. Building Transparency and Trust: For medical real estate investors and property managers, conducting regular CAM reviews helps maintain transparency with tenants. This fosters trust and collaboration, which is particularly important in the healthcare sector, where tenants rely on their lease arrangements to maintain a stable and predictable operating environment.

6 Key Aspects of a CAM Review

During a CAM review, both medical tenants and landlords should examine various aspects of the CAM charges to ensure fairness and accuracy. Below are some key areas to focus on during the review process:

1. Understanding the Lease Agreement

Before diving into the details of the CAM charges, it’s important to carefully review the lease agreement itself. The lease should outline the types of costs that are included in the CAM charges and how they are calculated. Common items that may be included are maintenance costs, property taxes, insurance premiums, and utilities. A clear understanding of the lease terms will help tenants identify any discrepancies between the lease and the charges they are being assessed.

2. Allocating Costs for Common Areas

In most cases, CAM charges are allocated based on the proportion of the total square footage that a tenant occupies. For example, if a tenant occupies 10% of the total building space, they may be responsible for 10% of the CAM charges. However, it’s important to check that the allocation is being calculated fairly. In some cases, tenants may be overcharged if the allocation is not done correctly.

3. Assessing Maintenance Services

Medical office buildings require a higher level of care and attention than standard commercial properties. Review the maintenance services included in the CAM charges to ensure that they are in line with the needs of a healthcare facility. For example, cleaning services in medical buildings may include specialized sanitation protocols that go beyond standard janitorial services. If these specialized services are not being accounted for, they should be flagged during the review.

4. Energy Efficiency and Sustainability

Medical office buildings often have higher energy consumption due to the specialized equipment used, the need for climate control, and long operating hours. During the CAM review, tenants should verify that utility expenses, including electricity and water, are allocated correctly. Additionally, many medical facilities are now focusing on energy efficiency and sustainability, which could influence CAM charges. For instance, energy-saving initiatives like LED lighting or energy-efficient HVAC systems may lead to lower utility costs. It’s important to confirm whether any energy-saving measures have been implemented and whether the resulting savings are reflected in the CAM charges.

5. Overlooked Costs to Watch For

Some costs may be overlooked or improperly included in CAM charges. Here are a few common issues to watch for during a CAM review:

• Property Management Fees: Some landlords may include excessive property management fees as part of the CAM charges. Tenants should ensure that these fees are reasonable and in line with industry standards.
• Capital Expenditures: Certain large-scale property improvements, such as renovations or roof repairs, may be incorrectly included in CAM charges. Capital expenditures should generally be excluded unless specifically stated in the lease agreement.
• Legal and Administrative Costs: Some landlords may attempt to pass on legal fees or other administrative costs as part of the CAM charges. These costs should be carefully reviewed to determine if they are legitimate.
• Unrelated Expenses: Occasionally, landlords may attempt to include costs that are unrelated to the common areas, such as marketing or advertising expenses. These should not be included in CAM charges.

6. Tracking and Documentation

When reviewing CAM charges, it’s essential to maintain accurate records of past CAM statements and any correspondence with the landlord. This documentation will serve as valuable evidence in case of disputes or discrepancies. Tenants should also track any adjustments made to the charges over time and confirm that the landlord has followed the terms outlined in the lease agreement.

Ensuring Fairness in CAM Charges

CAM reviews are a critical process for both landlords and tenants in medical real estate to ensure that costs associated with maintaining shared spaces are fairly distributed and accurately reflect the actual expenses incurred in operating a medical facility. By conducting regular reviews, medical tenants can verify that their charges are in line with the lease terms, while landlords can maintain transparency and build trust with tenants. With attention to detail and a thorough understanding of the lease agreement, both parties can prevent disputes, identify overcharges, and create a fair and sustainable leasing environment for medical professionals.