There are often times a bit of confusion when it comes to CAMs and NNNs. The difference between the two is very simple. CAMs are Common Area Maintenance, and NNNs are three nets, which include property tax, insurance and common area maintenance.
CAMs typically include expenses such as landscaping, security, trash, scheduled maintenance, management fees, etc. CAMs are essentially one of the three nets in the NNN. Within a shopping center these costs will be split between all the tenants based on the percentage of the center each occupies of the shopping center. Of course there are always exceptions to the rule.
NNNs include three different net expenses. With these three expenses (tax, insurance and CAM) the landlord passes on all the expense to the tenants except the expenses that are non-recurring. Some non-recurring expenses include roof repairs, parking lot paving, commissions and tenant improvement allowances.
CAMs and NNNs are mostly used in commercial retail where most expenses of a building are passed through to the tenants. This makes it much easier to calculate profits and certain other financial metrics for assessing value.
Understanding the difference between the two charges and understanding the basics of what CAMs and NNNs entail is one of the first steps to further understand retail real estate.