Administrative Overhead in CAM Reconciliation
General administrative costs associated with building operations, including accounting, legal, audit, office supplies, telecommunications, and other overhead expenses that support the property management function but are not directly attributable to a specific service category.
Benchmarks per SF
Source: BOMA EER / IREM 2024
Typical GL Codes
Recoverable Components
- On-site administrative staff salaries and benefits
- Office supplies for management office
- Telecommunications for building operations
- Annual audit fees for CAM reconciliation
- Building licenses and permits
Non-Recoverable Components
- Corporate overhead of the management company
- Legal fees for lease negotiations
- Legal fees for tenant disputes
- Accounting fees for ownership-level tax returns
- Political contributions or charitable donations
Allocation Method
Pro-rata by rentable square footage. Administrative overhead is generally fixed — the management office operates at the same staffing level regardless of occupancy. Not typically subject to gross-up unless the lease specifically identifies administrative costs as variable.
Common Lease Language
“Operating Expenses shall include reasonable administrative costs incurred in connection with the operation and management of the Building, including on-site administrative staff, office supplies, telecommunications, and professional fees directly related to Building operations.”
Common Billing Errors
- Including corporate overhead of the parent management company in building-level CAM
- Double-counting administrative costs that are already included in the management fee
- Passing through legal fees for tenant disputes as administrative overhead
- Including accounting fees for partnership/ownership tax returns
Year-over-Year Trends
Administrative overhead has increased 3-5% annually, largely tracking general inflation and wage growth. Technology costs (property management software, cloud services, cybersecurity) are an increasing component. Some landlords are shifting to shared-service models across portfolios, potentially reducing per-building administrative costs.
Additional Context
Administrative overhead is the most difficult CAM category to audit because it encompasses many small, diverse expenses. Tenants should verify that administrative costs are not duplicating services already covered by the management fee. The management fee is intended to cover the management company's overhead — charging additional administrative overhead on top of the fee may constitute double-dipping.
Related Resources
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