Ask the Experts: The Impact of COVID-19 on CAM (Common Area Maintenance)

As we begin "The Great Re-Occupancy," now is a good time for landlords and tenants to start talking about how #COVID-19 will impact operating expense pass-throughs for 2020. (Sometimes - particularly when referring to pass-throughs at industrial and retail properties - these are referred to as "CAM" (short for Common Area Maintenance) charges. For office buildings, the more accurate term is "operating expense pass-throughs.")

In addition to base rent, a tenant is almost always obligated to cover its proportionate (pro rata) share of a property's operating expenses. Landlords usually estimate the tenant's operating expense obligation - and then charge the tenant in equal monthly installments throughout the year. The estimates are based on the approved budget.

Unfortunately, COVID-19 has all but destroyed property budgets for 2020. Asset managers and property managers around the world are (or should be) revising their 2020 budgets - based upon the latest information - in order to accurately reforecast operating expenses for the year. (This is likely going to be a moving target since there are still so many unknowns in terms of when property operations will return to "normal" - and this reforecast exercise will likely occur many times between now and the end of the calendar or fiscal year.)

Speaker: Marc Fischer - InspiRE Real Estate Services
Marc Fischer is nationally recognized as an innovative and dynamic leader in the commercial real estate industry. For a quarter century, he has excelled at building and leading large and diverse real estate organizations that serve some of the most discriminating institutional investors. Marc founded InspiRE to provide Legendary Service to our Clients. In a complex world that is constantly changing, InspiRE is committed to helping our Clients – both investors in and occupiers of commercial real estate – to understand and navigate the intricacies of real estate decision making. InspiRE develops enduring client relationships built on quality service, collaboration, and trust, and we deliver integrated commercial real estate services that leverage our unique insight and foresight, sound market research, and relevant knowledge. In addition, as an accomplished author, a sought-after speaker, and a talented instructor, Marc thoroughly enjoys igniting a passion in others to become the best and brightest talent in the real estate industry.