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Why You Should Get A Complimentary Lease Review (Part II)

Why You Should Get A Complimentary Lease Review (Part II)

8/29/2019 9:42:29 AM   |   Comments: 0   |   Views: 20
CAM Fees

Next, your broker will go over what your lease says about Common Area Maintenance (CAM) charges with a proverbial fine-tooth comb. He'll look to see how your landlord is actually calculating CAM fees and compare that to the method he's supposed to be using.

This method will be specified in your lease.

You pay for more than just your office space because you use common areas that have to be maintained. The more space you rent, the more you'll have to pay in CAM fees.

They're one of the net charges billed by a landlord to a tenant in a triple net (NNN) lease and are added to your base rent for maintenance your landlord does on common areas of the building.

Each tenant in the building is supposed to pay his pro-rata share of the total CAM charges. An example of a CAM item is cleaning the lobby area.

This is a section of the building that all tenants use, so all tenants should pay for its upkeep.

Your Lease Should Say What CAM Fees Include

Even real estate professionals struggle mightily with understanding the dizzying complexities of CAM fees. Because CAM fees can cover so much, there's a lot of potential for abuse here.

Your lease should list precisely what CAM expenses cover, how often they're paid, and how much they can increase each year. Make sure every CAM fee is explained. You need to know what you're shelling out money for, so you'll see if you're being overcharged or not.

If your landlord simply calls everything he's charging you above the base rent "CAM fees" without telling you what these fees consist of, you'll probably be paying for things you shouldn't be paying for.

Fixed Vs. Variable

There are variable CAM fees, where the amount you'll pay is based on several factors. There are also fixed CAM fees. It's important that your lease spells out the difference between variable and fixed CAM expenses and include a cap.

 This amount shouldn't be more than 5-7% per year.


 Your tenant rep will be checking what your lease says about parking. Your broker will be looking at what your contract says about parking because it's one of the biggest sources of aggravation and complaints for commercial tenants.

 If you want fewer headaches, it's essential to get this section of your lease right.

Your lease should precisely stipulate that you're entitled to a specified ratio of parking spaces per square foot. For example, a 3:1000 ratio means you're guaranteed three parking spaces for every 1,000 square feet of space. This way, you'll always have enough spots for patients and employees.

Having a specified ratio also makes sure your parking availability expands if you expand.

If you have free parking when you sign your lease, there should be language in your contract guaranteeing this right in perpetuity. And if you're paying for parking, your contract should state that this amount will stay the same for the duration of your lease.

 You should only be paying for spaces you actually use. So, make sure your lease says you're entitled up to a certain number of spots. It should go on to say that if your needs change and you require fewer spaces, you can let the landlord know so he won't charge you as much.

 Then, if you suddenly find that fewer employers are driving to work, you'll save some money.

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