CAM vs Capital Expenses in Commercial Property Management

Commercial property management in Hawaii often comes with questions about CAM expenses. Both owners and tenants frequently ask, "Can we use CAM for this?" or "Is this included in CAM?" As much as we wish it were simple, it's not always black and white. But we can help break it down.

Walua Professional Center Managed by Big Island Commercial Properties

If you own or lease commercial property, you've likely come across CAM, short for Common Area Maintenance. CAM refers to the shared operating expenses needed to maintain the common areas of a property, like parking lots, hallways, restrooms, stairwells, walkways, landscaping, and other areas used by multiple tenants. Most commercial leases require tenants to cover these costs, typically paying base rent per square foot, plus their share of CAM. 

CAM is often confused with capital expenses, but they're not the same. CAM covers routine, day-to-day maintenance, while capital expenses involve major repairs or replacements that add long-term value to the property. Understanding the difference is essential for accurate budgeting and clear communication with tenants. As part of our commercial property management work in Hawaii, we regularly assist both landlords and tenants in navigating the distinction between them. And we work with landlords to incorporate these costs into future budgets.

What CAM Usually Covers

Some items are clearly part of CAM. These are routine, shared maintenance costs that benefit all tenants and help keep the property clean, safe, and in good working order. Pest control, tree trimming, cleaning supplies, toiletries, regular upkeep of shared spaces, and landscaping labor all typically fall into this category.

If the expense supports the common areas, it generally qualifies as CAM. These are the more straightforward items, and they’re usually the easiest to plan for and budget. That said, purchasing tools or equipment like leaf blowers, hedge trimmers, or gardening supplies typically isn't considered a CAM expense. While labor for routine landscaping is CAM-eligible, the cost of tools or materials used in the long term usually falls outside that scope.

Projects like roof coatings, repainting support structures, repairing walkways, or redoing a bathroom floor take a little more thought. Some of these fall into a gray area, where qualifying for CAM depends on how the work is scoped, budgeted, and framed in the lease. For example, if a roof coating is applied to extend the life of an existing roof, not to replace it entirely, there's often a strong case for treating it as a CAM expense.

The general rule is that repairs fall under CAM, while replacements are a capital expense. Work that maintains what's already there typically qualifies as CAM. If you're replacing it entirely or making a major upgrade, it typically becomes the landlord's responsibility.

Commercial Property Management

CAM vs. Capital Expense Breakdown

CAM (Repair & Maintenance)	Capital Expense (Replacement or Upgrade)
Patching and coating an aging roof	Replacing the entire roof
Cleaning and repainting stairs and rails	Installing brand new stairs and rails
Repairing cracked concrete in a walkway	Replacing the entire walkway
Spot-replacing damaged fencing	Installing all-new fencing
Painting exterior walls to maintain appearance	Replacing siding or exterior cladding
Sealing and weatherproofing existing wood structures	Rebuilding decks, landings, or balconies
Replacing broken light fixtures in common areas	Upgrading to a new lighting system
Servicing an HVAC unit	Purchasing and installing a new HVAC system
Touch-up paint in shared hallways	Full remodel of interior finishes
Clearing blocked gutters	Replacing the entire gutter system
Cleaning and supplying common restrooms	Renovating or expanding restroom facilities

It’s essential to maintain and repair your building to the highest standards. Letting things slide until they need full replacement leads to higher costs and limits what can be covered by CAM. Using CAM funds proactively helps keep your property in top shape. And that benefits everyone: the landlord, and the tenants, who rely on a clean, safe, and well-maintained space to run their businesses. It's a win-win.

There's no universal rulebook, but consistency helps. Look at whether the expense is for shared use, whether it maintains the property's function and safety, and whether the lease and budget clearly cover it. A knowledgeable property manager can help break down each situation, apply the right criteria, and ensure costs are handled appropriately.

It's a case-by-case, item-by-item process, and it all comes down to how you plan for it, justify it, and expense it.

Track CAM Accurately & Reconcile Annually

Good recordkeeping makes everything easier. Separate CAM and capital expenses, keep invoices and receipts on file, and track the scope of each project. Was it a repair or a full replacement? The right tools and the right team make a big difference.

Reconcile CAM annually and clearly communicate the process to tenants. Don't wait too long. No one wants to go back months later asking tenants to cover a large, unexpected balance. When quoting lease rates, include accurate CAM estimates so potential tenants understand the whole picture upfront.

Label Expenses Correctly

Miscategorizing expenses can frustrate tenants, throw off your books, and lead to tax issues. Clear definitions upfront make everything easier in the long run.

Commercial property management in Hawaii is about staying ahead of costly issues with smart, preventive maintenance, especially in a climate where sun, salt, and humidity accelerate wear and tear. When used correctly, CAM is a valuable tool for extending the life of your property, protecting your investment, and giving tenants a space they're proud to operate from.

If you're a commercial property owner looking for support with CAM budgeting or full-service commercial property management in Hawaii, we're here to help. Let's keep your building running smoothly.