August 05, 2020
Leasing conditions during the pandemic environment is rapidly evolving, and the future of residential and commercial leasing is unravelling as we sail through the repercussions of Covid-19. Passing on the Common Area Maintenance (CAM) charges to the tenant is often considered the most favourable lease agreement for the landlord, and there is no universal agreement on what exactly CAM charges should include. These maintenance costs can relate to any cost of managing and maintaining the property. Typically, CAM charges includes parking lot maintenance, lawn care and landscaping, hallways, elevators, sidewalks, bathrooms, utilities, snow removal and other operating expenses. In a triple net lease agreement, the tenant pays the CAM and other charges on a pro rata basis, and due to the stability of net cash flow, investors and real estate investment trusts (REIT) usually prefer to purchase properties with triple net (NNN) leases. According to the National Association of Realtors, the most common way CAM charges are calculated is by determining each tenant’s pro rata share of square footage in the property. This may be a viable option if we look at it at a macro, one-size-fits-all level. But the reality is that every business, depending on its nature of work, is going to be different in terms of what its post-COVID plan is.
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