Utilities (Common Area) in CAM Reconciliation
Electricity, gas, water, and sewer charges for building common areas including lobbies, corridors, restrooms, parking structures, exterior lighting, and shared mechanical systems. Does not include individually metered tenant utilities.
Benchmarks per SF
Source: BOMA EER / IREM 2024
Typical GL Codes
Recoverable Components
- Common area electricity (lobbies, corridors, restrooms)
- Exterior and parking lighting
- Common area HVAC energy costs
- Elevator energy consumption
- Water for landscaping irrigation and restrooms
Non-Recoverable Components
- Individually metered tenant electricity
- Utility deposits
- Late payment penalties on utility bills
- Utility costs for vacant suites (varies by lease)
Allocation Method
Pro-rata by rentable square footage for common area utilities. Subject to gross-up — common area utility consumption varies with occupancy (more restroom usage, more elevator trips, more lobby activity with higher occupancy). Typically grossed up to 90-95% occupancy.
Common Lease Language
“Operating Expenses shall include all costs of utilities furnished to the Common Areas of the Building and Property, including electricity, gas, water, sewer, and any energy surcharges or demand charges.”
Common Billing Errors
- Including individually metered tenant utility costs in common area CAM
- Failing to gross up common area utilities when occupancy is below 90%
- Misallocating HVAC energy between tenant-metered and common area portions
- Including utility costs for building systems serving only vacant floors
Year-over-Year Trends
Common area utility costs have increased 6-10% annually due to energy price volatility and grid infrastructure surcharges. Many landlords are investing in LED retrofits, smart building systems, and on-site solar to reduce costs. Green lease provisions increasingly allow landlords to pass through capital energy investments that reduce operating costs.
Additional Context
Common area utilities are one of the most frequently disputed CAM items because the line between 'common area' and 'tenant' consumption is often blurred, especially in buildings without comprehensive sub-metering. Best practice is to install sub-meters on each floor and major system to accurately separate common area from tenant consumption.
Related Resources
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