Negoiating CAMs

[Bryan Wilson]

Hello Everybody, Happy New Year

Has anybody Negotiated CAMs? If so, is it worth the effort, and what did you ask for
Currently in the process of taking over a laundromat, and he stated he had been charged 18k over the last two years in CAMs . The lot has new ownership and has been updated. It is a NNN lease, but the current owner pays 2.75 an sq ft with CAMs
We are currently down to 1.75 sq ft 4% bump first five years 3% after that the 20-year term
Fine with the NNN lease and responsibility that comes with this but I don’t feel we should paying unnecessary CAMS

[Brad McGuire]

Hey Bryan,

Your NNN should be paid according to what the landlord is paying for those expenses, and should not have any profit built in to that. I understand they can use that to generate a little extra cash, but that isn’t as typical as it perhaps used to be. With that said, if your landlord is basing that off the actual NNN costs, then the only area for potential negotiation is generally going to be the escalation amounts. There are probably other areas that you are going to want to push a bit more on in regard to the lease itself and other negotiable items. Sometimes it’s a trade off of how much to push and where. The fact that you are down to $1.75 a sq ft I would say is pretty good. I’m currently at $5.

Best of luck!

Brad McGuire

[Chris Martinez]

Thanks for this conversation. I’m looking at a place and the CAM’s are 95k a year on a 3,000 SQFT place. Since I have no clue what is appropriate or what it can make. I’ve felt lost.

Chris

[Jason Dodge]

You can always ask to see what the actual CAM is. They need to be able to prove their numbers. Then call around to see if that is similar to other equally sized locations. I looked at a fully attended laundromat that was for sale in a strip mall that the seller owned and the sellers P&L had no payroll in it. When I questioned it they said the attendants were employed by the strip mall. So dude had all his tenants of the mall paying his payroll in his laundromat. They were all in his CAM, this had a very shady feeling to it. And of course he is basing the selling price off of no employees. This is just unethical in my book.

[Sherrie Myers]

Hi – In the middle of negotiation for a Zombimat. Landlord says CAM is .35 per sq foot. As I understand the NNN is the cost of the landlords ownership and maintenance of the building/property. This landlord does no repairs on the building/property. The Property Tax on the building/property. According to the Building / Treasure Internet resource.
Property Tax is $6,252.81 – Building Sq ft is 5642 our lease space is 3000 Sq ft the equates to .093 per sq foot.
I will find out about the cost of Insurance. In our county the Trash removal and the Sewer can lien on the property so most landlords pay that and this one does. Also there is little – or – no landscape maintenance on the property. I am going to ask for the bills so I can verify. Any suggestions?

[Jason Dodge]

35 cents a square foot sounds low. I’m in the mid-west and snow plowing alone can drive up CAM more than 35 cents. My concern here is you said the owner does nothing. You may want to plan on doing everything if you rent this place. So if the roof leaks will the owner fix that? Who’s picking up the trash in the common areas? Does the property look neglected? That alone could scare off good customers and bring in the trouble makers.

[Dan Arnett]

OK, I’ll be the one to ask. Can someone please define CAM for me?

[Jason Dodge]

Common area maintenance. Landscaping, snow removal, basically everything that is a common area and usually includes roofs, parking lot maintenance, exterior walls, sometimes managment, maintenance people and other things defined in the lease as CAM.

[Sherrie Myers]

Jason and others interested. This is a small corner strip-mall built in 1986. Building is 6500 sq feet. The laundry space is 1500 sq feet. We are taking the 1500 sq feet next door to add fluff and fold and eventually Pick up and Deliver. The property owner does NOTHING!! If the roof leaks -we fix, if the swamp breaks- we fix. If the plumbing bursts we fix. It is a laundry that has been closed for over 1 year. Our Base Rent is $1.10 cent a sq ft for 3000 sq ft. I asked for NNN to be $0.25 he said he would have to verify the NNN. I asked for full audit annually of all expenses reimbursed in the NNN in the LOI – owner did not object. The property is neglected but it is cosmetic. The area is good for Laundry and the closest 4 mats do a good business with old equipment and old school laundromat service. I plan to bring all new equipment and the only professional Fluff and Fold on this side of town. I currently am in the third round of negotiations on the LOI and hope to close the deal on the next round.

[Jason Dodge]

Also to be clear, many areas calculate price per square foot as a annual number whether its CAM or rent. So if I am leasing 3,000 square feet for $10 a sq ft. That’s 3000 X 10 = 30,000 / 12 = $2500 a month rent payment. I’m looking at your numbers trying to figure out why they are so inexpensive. I think your using price per square foot by the month instead of annually. So your $1.10 is actually $13.20 a square foot, so rent before CAM is $3300??

[Sherrie Myers]

My numbers are correct. Here in Las Vegas Nevada. We lease by the sq Foot per month. The Landlord set the monthly lease rate. $3300.00 per month. He doesn’t know the actual sq footage of the space and does not care. He said he thinks the NNN adds $0.35 so that would be additional $1,050.00.
Net rent $1.45 per Sq ft. or $4,350.00 a month. In Las Vegas this is average. Not a great deal, but is consistent with the area. I am trying to negotiate the NNN down to $.25 but he says it is what ever it is based on his expenses. He is out of state and has not been at the property for more than 4 years – he says. He will not be responsible for any Tenant Improvement or repairs. The laundry is about 1500 sq ft. The building department plans says that there are 27 washers permitted and 12 – double stack dryers (24 total). It is cramped.

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