Lease clause guide
CAM caps: controllable costs, cumulative vs non-cumulative
What does a CAM cap actually protect?
A CAM cap limits the annual increase in controllable operating costs, typically to 4-6%. It never covers taxes, insurance or utilities, so the protection applies to a minority of the recovery unless the wording says otherwise.
01In detail
The first question is which costs the cap touches. A cap on controllable costs excludes taxes, insurance, utilities and snow removal in most drafts — often more than half the pool. A cap on total additional rent is far more valuable and far rarer.
The second question is cumulative versus non-cumulative. A cumulative cap lets an unused allowance carry forward, so two flat years permit a large third-year increase. A non-cumulative cap resets annually and is the tenant-favourable form.
The third is the base. A cap measured against the prior year's actual recovery behaves differently from one measured against the base-year figure compounded forward. Model both; over a ten-year term the gap is routinely worth several dollars per square foot.
02Questions
Frequently asked
Is a 5% CAM cap good?
It depends entirely on scope. A 5% cap on total additional rent is strong. A 5% non-cumulative cap on controllable costs only is ordinary market.
Can a landlord recover capital costs through CAM?
Only if the lease permits it. Where it does, insist on amortisation over the useful life at a stated interest rate rather than expensing in the year incurred.
03Other guides
- Net vs gross lease: what you actually pay
- How a TMI gross-up works and when it is fair
- Demolition and relocation clauses: what they cost a tenant
Not advice — Leaselor is a data publisher. We do not broker, arrange, or transact, and nothing here is an offer or professional advice. Figures are indicative benchmarks for comparison and must be confirmed with a licensed professional before you rely on them. About Leaselor