As commercial real estate tenants, it’s crucial to optimize cost savings wherever possible. One often overlooked opportunity lies in conducting Common Area Maintenance (CAM) audits. By thoroughly examining various aspects of lease expenses, tenants can uncover potential cost savings in several key areas. Let’s explore how CAM audits can help tenants unlock significant savings across annual expense reconciliations, capital improvements, escalation caps, gross-ups, tenant improvement allowances, real estate taxes, pro rata share discrepancies, base year calculations, landlord billing issues, and even security deposits.
Annual Expense Reconciliations:
CAM audits scrutinize annual operating expense and reconcile them to ensure that tenants are only charged for their fair share of operating expenses. By reviewing invoices, contracts, and lease agreements, tenants can identify billing errors, duplicate charges, or incorrect calculations that may result in overpayment.
Capital Improvements:
CAM audits assess whether the capital improvement costs charged by the landlord align with lease agreements. Tenants can verify the appropriateness of expenses, negotiate the allocation of costs, and ensure compliance with lease provisions, potentially reducing their financial burden.
Escalation Caps:
CAM audits confirm whether escalation caps on expenses are accurately applied. Tenants can ensure that their lease terms are being adhered to, preventing costs from exceeding predetermined limits and maintaining budget predictability.
Gross-Ups:
CAM audits evaluate whether gross-up calculations for shared common area expenses are performed correctly. Identifying any discrepancies can lead to fairer allocation among tenants, potentially reducing individual cost burdens.
Tenant Improvement Allowances:
CAM audits review tenant improvement costs to ensure they align with the lease agreement. By validating that charges are within the agreed-upon allowance, tenants can avoid unexpected expenses and effectively manage their financial resources.
Real Estate Taxes:
CAM audits verify the accuracy of real estate tax assessments. Tenants can identify potential errors or discrepancies, ensuring that they are not overpaying on their share of property taxes.
Pro Rata Share Discrepancies:
CAM audits analyze pro rata share calculations to ensure accurate distribution of common area expenses among tenants. This scrutiny helps tenants identify any imbalances or errors in cost allocation, leading to fairer financial responsibility.
Base Year:
CAM audits assess base year calculations to confirm their accuracy. By verifying that the base year is appropriately established, tenants can ensure that future expense increases are calculated correctly, avoiding unnecessary financial strain.
Landlord Billing Issues:
CAM audits scrutinize billing practices to identify any discrepancies or inaccuracies in charges. This thorough examination empowers tenants to rectify billing errors promptly and negotiate fair resolutions.
Security Deposits:
CAM audits review security deposit accounts to ensure compliance with lease terms. Tenants can identify any discrepancies or mishandling of funds, ensuring the appropriate return of their security deposit upon lease termination.
CAM audits offer tenants an excellent opportunity to uncover cost savings and ensure fair and accurate expense allocations. By engaging in these audits, tenants can proactively manage their lease expenses, identify potential errors or overcharges, and negotiate favorable outcomes. Embracing CAM audits allows tenants to maximize their cost savings, enhance financial predictability, and optimize their overall leasing experience. Take control of your lease expenses through CAM audits and reap the benefits of significant cost reductions and improved financial performance.
Learn More about RE BackOffice’s CAM Audit Services:
Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 17+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.