What is Common Area Maintenance, and Why Should I Care
For those who are just getting into the commercial property management industry or who are preparing to take the leap into being property managers, there are a lot of things to learn and get used to. One of the biggest surprises to new commercial or multifamily property managers is the issue of common area maintenance (CAM), and how it impacts property maintenance costs.
What is common area maintenance, and why should new property managers care about it?
Common area maintenance is a blanket term covering the upkeep of all “common” or “shared” areas in a commercial or multifamily property that are not specifically rented by any one tenant. As noted in an article on CAM fees by thebalancecareers.com, CAM fees serve as a way “to require tenants to help cover the landlord’s direct expenses for ‘common areas.’” Some examples of common areas could include (but are not limited to):
All of these areas require frequent maintenance. However, since they aren’t rented by any one person/entity, property managers cannot assign responsibility and expenses to a single renter. So, CAM charges are usually distributed among all the building’s occupants.
The specific property maintenance services that are included in CAM charges can vary depending on the type of space being maintained, whether any damage has occurred, and if any upgrades are being made to the common area.
For example, parking lot CAM charges may cover basic cleanup services carried out by the property manager’s in-house staff some months, while other months may see extra expenses for fixing potholes, repainting parking spot lines, or installing new dividers, lighting, and other safety measures.
Common area maintenance costs for an elevator might include labor for monthly inspections, parts and labor for basic elevator maintenance, and the annual license or permit fee.
Many articles on CAM fees focus on the renter’s perspective—trying to explain what they are to tenants so they can understand why this item might appear on their monthly, quarterly, or yearly rental bill. The reason that property managers should be concerned with how they handle common area maintenance is that it can have direct and indirect impacts on their ability to attract and retain renters. Additionally, failing to account for CAM expenses in rental agreements could lead to a loss of profits as property managers have to pay out of their own pocket for these services rather than charging renters for them.
Consider this: If a rental property has shoddy-looking common areas (run-down elevators, dingy lobbies, and trash-filled parking lots), renters may be driven away. On the other hand, if CAM expenses are too high or are not clearly defined and seem to vary from month to month, renters may not like the uncertainty and refuse to sign a lease.
In retail commercial property management, managing CAM is especially important because the appearance of common areas can impact the ability of renters to attract customers themselves. Having well-maintained common areas can be a major selling point for these commercial properties.
Balancing property maintenance costs with what renters can afford is a major challenge for new property managers. However, there are a few things that property managers can do to make managing CAM issues and expenses easier (and more affordable):
Curious about how you can use the Homee On Demand property maintenance platform to reduce common area maintenance costs for your property management business? Reach out to the HOMEE team today to learn more!