Common Area Maintenace fees, or CAMs, refer to operating expenses that are shared by building owners and tenants in a commerical property. These fees can range from lighting in a reception area to landscaping in the parking lot to the water cascading from a fountain in a courtyard. How these fees are split can also vary widely depending on the type of business being done in the building. Oftentimes, in a retail environment, the tenant bears the majority of the opex associated with the space that they occupy. But, in an office park environment, tenants can share many more costs with the building owner due to the potentially large areas of common space.
The factors that comprise CAMs, and how they are split, can involve a complex set of factors. Rather than detail them here, an informative blog post by Aquila Commercial in Austin, TX provides a nice primer. However, as more commercial real estate stakeholders – developers, building maintenance companies, and tenants – become interested in intelligent building automation, a quesiton of who pays for automation solutions can become an equally complex equation.
Heavy lifting involved?
It is probably no deep insight to say that a reduction in the OpEx related to HVAC systems, water/irrigation, elevator maintenance, and lighting in common areas can not only be substantial, but also a benefit that could be enjoyed by all of the stakeholders cited above. Less quantifiable benefits would be the quality of experience enjoyed by tenants and customers that occupy a building due to lush greenery, responsive elevators, and environmentally condusive common areas. Nevertheless, all of these factors have value, and amortizing the cost of intelligent building solutions over a certain percentage of common area, and then dividing those costs among the various stakeholders is not as straightforward as dividing the costs of the CAMs themselves.
Not only do the costs of the intelligent building solutions play a role, but, of potential greater impact is the number of parties that will have to agree on the scope of an intelligent building deployment, which vendors will be selected, and who bears the responsibility for ongoing IT maintence, goverance and oversite of the system being deployed.
Agreeing on a solution with such broad-reaching implications on the ongoing maintenance of a property represents a potentially heavy lift in which a number of stakeholders, with potentially differing agendas, must come together.
To be sure, a best practice for achieving concensus on the role that CAMs will play as a growth driver or inhibitor in intelligent building automation will not be a one-size-fits-all proposition. However, it does represent an opportunity for technology suppliers to play a consultative role in bringing the various constituencies together, and creating ROI models that show clear value to all parties concerned.
Have a perspective on CAMs, intelligent buildings and how both will impact the commercial real estate market? Ping me on LinkedIn or Twitter to join the conversation. We’d love to hear from you.
