What is CAM (common area maintenance) in industrial real estate?

What is CAM (common area maintenance) in industrial real estate?

Common area maintenance (CAM) charges are the costs associated with maintaining and operating the shared portions of a multi-tenant industrial property — areas that benefit all tenants but are not exclusively occupied by any one of them. In an industrial context, common areas typically include the parking lot, driveways and truck courts, landscaping, exterior building lighting, snow removal, roof and structural components, and shared loading areas or corridors. In a standard GTA industrial net lease, the tenant pays base rent plus three categories of operating cost recoveries: property taxes, building insurance, and CAM. These three components together are often referred to as the triple net (NNN) expenses. The tenant's share of CAM is typically calculated in proportion to the tenant's leased area as a percentage of the total rentable building area — a tenant occupying 25% of a multi-tenant building pays approximately 25% of the total CAM costs for that year. CAM charges in GTA industrial properties are typically estimated at the start of each year, with the landlord providing a budget estimate of expected costs. The tenant pays the estimated CAM monthly alongside rent. At the end of the year, the landlord reconciles actual costs against the estimate — if actual costs were higher than the estimate, the tenant pays a year-end true-up; if costs were lower, the tenant receives a credit. Most institutional landlords in the GTA industrial market conduct an annual CAM reconciliation with an audited or reviewed cost statement. CAM costs for GTA industrial properties vary significantly depending on building age, size, and condition. Older multi-tenant buildings from the 1980s and 1990s with aging roofs, parking lots, and mechanical systems typically carry higher CAM charges than newer purpose-built industrial facilities. As a rough benchmark, total operating cost recoveries (taxes, insurance, and CAM combined) in GTA industrial leases commonly range from $3.50 to $6.50 per square foot annually in 2026, depending on submarket, building vintage, and specific property characteristics. Tenants should pay close attention to the CAM definition in their lease — specifically, which costs are included in CAM and which are excluded. Items that tenants typically negotiate to exclude from CAM include capital expenditures (major roof replacements, parking lot resurfacing), management fees above a defined percentage of revenue, costs related to other tenants' spaces, leasing commissions, and costs recoverable from insurance proceeds. A well-negotiated lease will include a defined CAM exclusion list, a cap on annual CAM increases (commonly 5% per year cumulative), and the right for the tenant to audit the landlord's CAM reconciliation statement within a defined period after delivery. In single-tenant industrial buildings, the concept of CAM is less relevant since the tenant typically controls and maintains the entire facility. In this context, the tenant's maintenance obligations are spelled out directly in the lease rather than allocated as a proportionate share of building-wide costs. For tenants evaluating multi-tenant industrial space in the GTA, understanding the total occupancy cost — base rent plus estimated taxes, insurance, and CAM — is essential for accurate budgeting. Headline net rent figures do not tell the full story; two properties with identical net rents can have materially different total occupancy costs depending on their operating expense profiles. Michael Law advises GTA industrial tenants on lease negotiation, occupancy cost analysis, and site selection across Mississauga, Brampton, Burlington, Vaughan, and the broader 905 corridor. Contact Michael at mlaw@lennard.com or (905) 917-2045 to review the operating cost structure of any industrial lease you are evaluating.