Leasing Your Space

How to avoid excessive CAM charges?

1. Negotiate the specifics up front and incorporate into the lease document

2. Negotiate both CAM inclusions and exclusions

3. Cap the CAM at a reasonable Square Footage rate to avoid future escalations that may not be affordable

4. Ask for and expect to discuss the specifics on what is allowed to be charged as CAM

5. Make sure the CAM is for Maintenance and not new construction costs

6. Make sure that capital costs are amortized over the life of the improvement not charged for the total investment, if the costs are not amortized tenants who are in the last year of their lease will have a bill that's difficult to pay and one that they will have no benefit from!

7. Have the landlord to guarantee a minimum occupancy level for calculating CAM costs to avoid overpaying CAM when and if occupancy falls. In older centers with many vacancies this would break the tenants having to maintain a half-empty center with high maintenance costs.

8. Always include your right to audit the CAM account!

9. There are many other issues to address when considering a lease including signage approval, leasehold improvement approval and allowances, security deposits, building codes, usage clause restrictions and personal guarantees are a few of the points to consider.

Before executing any lease document:

1. Determine the extent of your personal financial exposure

2. Determine if the lease rates and charges will fit within your business plan operating budget (Is this lease affordable?)

3. Is lease transferable? Is the lease an asset or liability?

4. Ask yourself if you would buy the restaurant with this lease!

5. A good lease has an economic value and is considered an Asset! Proper planning means future resale dollars!