Advertising expenses are not part of common area maintenance costs

Which aspect is typically not included in common area maintenance costs?

• A. Cleaning and maintenance of shared facilities
• B. Insurance for common areas
• C. Advertising expenses
• D. Utilities for shared spaces

Answer: (C)

Common area maintenance costs typically encompass essential services related to maintaining the shared spaces of a property or community. These costs are generally associated with ensuring that there are clean and well-functioning facilities for all users, which includes cleaning and maintenance of shared facilities, insurance for common areas, and utilities for those spaces. Advertising expenses, however, fall outside the scope of common area maintenance costs. Such expenses are aimed at promoting the property or community rather than maintaining it. They do not contribute to the upkeep or operation of shared areas used by residents or tenants, thus making advertising an unrelated item when it comes to the costs typically allocated to maintaining common areas. This distinction clarifies why advertising is not included in the breakdown of typical common area maintenance expenses.

Let’s demystify a term that pops up a lot in retail leases and property management conversations: common area maintenance, or CAM. If you’ve ever walked through a shopping center and wondered what exactly the bill covers for the shared spaces, you’re not alone. CAM is that umbrella charge that keeps hallways clean, lights on, and common areas safe and usable for everyone who shops, visits, or works there. It’s not a line item you can ignore, because it affects budgeting, rents, and the overall feel of a property.

What CAM typically covers (the solid stuff you actually rely on)

Think of CAM as the ongoing care package for the parts of a building that nobody rents to a single tenant but everyone uses. It’s the shared space maintenance, not the individual storefront’s fit-out. Here are the usual components you’ll see, often itemized on a lease statement:

• Cleaning and maintenance of shared facilities: hallways, lobbies, restrooms in common areas, sidewalks, entrances, stairwells, and sometimes elevators or parking structures.

• Insurance for common areas: the liability and property insurance that covers the building’s shared spaces, not the tenant’s private premises.

• Utilities for shared spaces: electricity for common-area lighting, heating or cooling in common zones, water to public restrooms, and other utilities that serve the shared environment.

• Landscaping and exterior upkeep: landscaped medians, curb appeal, snow removal in winter, as well as parking lot maintenance.

• Property management and admin fees: the cost of running the property office, accounting, and general administrative services tied to the shared areas.

• Repairs and maintenance reserves for the common areas: minor repairs to fixtures in the common spaces and setting aside funds for future fixes.

It’s easy to see why those items matter. If the hallway is dirty, if the parking lot is poorly lit, or if the elevator squeaks in the middle of a busy Saturday, people notice. And if the shared spaces aren’t well cared for, the tenant’s own business can feel less inviting. CAM is really about preserving the environment in which all tenants operate.

A quick quiz bite: which one is not usually part of CAM?

Here’s a little memory jog you can keep handy. If you’re ever testing your understanding on this topic, the correct choice is C: Advertising expenses. CAM is about maintaining and operating the shared spaces. Advertising, marketing, or promotional campaigns—while important to attract customers—live outside the CAM bucket. They’re typically separate line items in a landlord’s budget or a tenant’s marketing spend.

Let me explain why advertising sits outside CAM

Advertising is all about drawing people to the property or a specific store. It’s a strategic move to boost traffic, awareness, and sales. CAM, on the other hand, is about physical upkeep: making sure the place is clean, safe, and functional. When you see an invoice labeled CAM, you expect charges tied to shared infrastructure, not promotional activities for the mall or shopping center as a whole. There may be some overlap in broader operating budgets, but the two live in different lanes.

A real-world flavor: Jersey Mike’s in a strip center

Picture a Jersey Mike’s sandwich shop tucked into a bustling strip center. The tenant pays rent and CAM to cover the shared spaces—the sidewalk in front, the parking lot lighting, and the maintenance of the building’s exterior and corridors that everyone uses. Here’s how the pieces typically break down:

• Clean and maintain shared facilities: The strip center’s common hallway and entrance doors see a lot of foot traffic. The cleaning crew sweeps, mops, and restocks soap in those shared restrooms. CAM helps ensure those spaces always feel welcoming.

• Common-area insurance: If something happens in a shared corridor—slip hazards, vandalism, or accidental damage—the insurance for those spaces helps cover the cost of repairs or claims, not the Jersey Mike’s interior.

• Utilities for shared spaces: The lighting in the common walkways and the heating or cooling in the lobby area are paid through CAM so the overall property remains comfortable for shoppers moving between tenants.

• Landscaping and exterior upkeep: A well-kept center with trimmed planters and clean façades makes a friendlier impression and supports foot traffic that benefits every store, including Jersey Mike’s.

• Management and admin: The center’s management team coordinates maintenance, security, and vendor contracts for the shared areas, which keeps operations smooth for all tenants.

Now, where does advertising fit in this picture? Advertising could be mall-wide promotions, seasonal campaigns, or banners that decorate common spaces to attract more visitors. Those expenses aren’t CAM—they’re marketing costs. It’s natural for tenants to want to know where marketing ends and CAM begins, especially when negotiating a lease or reviewing a bill. Clarity here reduces confusion and helps everyone budget more accurately.

How CAM charges are calculated and billed (a simple framework)

CAM isn’t a lottery ticket; there’s usually a predictable structure behind the numbers. Here’s how it commonly works, using plain terms and a quick example:

• Baseline CAM budget: The landlord prepares a budget for the upcoming year covering all expected common-area costs. This budget is the anchor for CAM charges.

• Tenant pro rata share: Each tenant’s CAM charge is a proportion of the total CAM budget, typically based on either the leased square footage or the percentage of the center a tenant occupies. A bigger footprint means a bigger share.

• Billing cadence: CAM charges can be billed monthly, quarterly, or annually, with a reconciliation at year-end when actual costs are tallied against the budget.

• Reconciliations and caps: At year-end, if actual CAM costs differ from the budget, landlords may issue a reconciliation bill or credit. Some leases include caps or holdbacks to prevent sudden spikes.

A tiny, illustrative math moment

• Imagine a center with a total CAM budget of $120,000 for the year and Jersey Mike’s occupies 2,000 of 50,000 total rentable square feet (that’s 4%).

• Jersey Mike’s CAM share would be 4% of $120,000, which is $4,800 for the year.

• If actual costs come in at $125,000, the overage is $5,000. The landlord might bill the tenant proportionally, or spread the variance across all tenants depending on the lease language.

• If the next year’s budget drops to $110,000, Jersey Mike’s share might be $4,400, assuming no special one-off costs.

A practical note for students and newcomers

CAM items aren’t random charges; they map to services that keep the property usable and attractive. When you’re analyzing a lease or comparing options, look for:

• A clear list of CAM components (the “what’s included” section).

• The method used to calculate each tenant’s share (per square foot, by occupancy, or a fixed percentage).

• Any caps, exclusions, or floors/ceilings on CAM charges.

• How year-end reconciliations are handled (timing, documentation, and dispute procedures).

• The relationship between CAM and other operating costs, like property taxes and insurance (some leases separate these, others bundle them in a single operating expense).

Why this matters for budgeting and conversations around a lease

For a small business like Jersey Mike’s, CAM can affect net operating income and the true cost of staying in a location. A center with high CAM charges might still be a good bet if foot traffic is strong and the site performs well; but you want to ensure those CAM costs are predictable and fair. Here are a few practical takeaways:

• Ask for an itemized CAM schedule: A line-by-line listing helps you see what you’re paying for and why.

• Check the reconciliation process: When will you receive the annual reconciliation? Will there be an audit or an opportunity to challenge items?

• Look for caps and adjustments: Some leases cap increases year over year or set aside reserves for major repairs to prevent sudden spikes.

• Separate marketing from CAM: If you’re budgeting for a tenant, you’ll want marketing expenses to be kept outside CAM unless the lease specifically ties some marketing to shared marketing programs.

Public-facing clarity and the “shared space” mindset

A big part of lease negotiation is setting expectations. CAM is a shared responsibility, and every party benefits from a well-run, transparent system. The cleaner the common areas, the more welcoming the overall property feels. The better lit the corridors, the safer the environment appears to shoppers and tenants alike. The more predictable the CAM charges, the easier it is for a small business to forecast costs and plan for growth.

A few quick mental models you can carry

• Think of CAM like maintenance for a communal gym in a building: you’re paying for the upkeep of what everyone uses, not the gear inside your own private space.

• If a cost doesn’t tangibly improve or protect shared spaces, it probably doesn’t belong in CAM.

• Advertising belongs to marketing, not CAM. They’re both important, just in different ways and on different bills.

Connecting the dots with everyday relevance

If you’ve ever walked into a building and noticed the parking lot lighting flicker slightly or the lobby floor gleam because someone swept and polished it, you’ve seen CAM in action. It’s the quiet backbone that makes a retail center reliable and inviting. For a retailer like Jersey Mike’s, that environment matters as much as the sandwich recipe itself. Your customers notice when the space feels clean and safe; they don’t notice the accounting line items, but they sure feel the impact on their experience.

In short, the typical CAM lineup covers the things that keep shared spaces functional and pleasant: cleaning, insurance for common areas, utilities for those spaces, exterior upkeep, and the like. Advertising, while essential to drawing crowds, sits outside this bucket. It’s a separate line item tied to marketing and promotion—important, but not part of the day-to-day upkeep that CAM is designed to fund.

If you’re dissecting a lease or just curious about how these charges come together, keep the core idea in mind: CAM is about shared space care, not about selling more sandwiches. The better the shared spaces are cared for, the more confidently a shop like Jersey Mike’s can operate, draw customers, and create a welcoming corner in that busy shopping center.

And there you have it—a straightforward map through CAM’s typical territory, with a practical touchstone you can carry into those real-world property conversations: advertising isn’t CAM, but the cleanliness, safety, and daily functioning of shared spaces certainly is.