What NNN and CAM Charges Cover on a Utah Warehouse Lease

NNN charges are the building's operating costs passed through to you on top of base rent: property taxes, building insurance, and common area maintenance. When a warehouse listing says $1.00/SF/MO NNN, the $1.00 is the landlord's rent, and the NNNs are a second number you need before you know what the space costs.

That third bucket is CAM, common area maintenance, and it's the piece tenants ask about most. It's also the one people use as a stand-in for the whole NNN number, which is where the confusion starts.

That second number is the one tenants skip, and it's the reason two listings at the same base rate can cost different amounts every month. Here's what sits in each bucket on a Salt Lake Valley industrial lease, and how to run the math in about a minute.

Property taxes

Your proportionate share of the building's Salt Lake County property tax bill, split by the square footage you occupy. When the county reassesses and the building's value jumps, the tax bucket moves with it. This is usually the largest of the three.

Building insurance

The landlord's policy on the structure itself: fire, casualty, liability for the common areas. This covers the building, not your business. You'll still carry your own policy for contents, equipment, and your operation's liability, and nearly every lease requires you to.

What CAM charges cover

Everything it takes to run the property: parking lot maintenance and striping, exterior lighting, landscaping, property management, and in Utah, snow removal. That last one is real money here. A January with back-to-back storms means plow trucks in the lot at 4 AM, and that line item lands in CAM. It's a big part of why Utah CAM budgets run higher than the same building would carry in Phoenix.

Inside CAM, the split that matters at the LOI is controllable versus non-controllable. Controllable costs are the ones the landlord chooses: the property management fee, landscaping, parking lot maintenance and striping, exterior lighting, general repairs. Non-controllable costs are snow removal, utilities for the common areas, and anything else driven by weather or by a rate nobody in the building sets. When a tenant asks to cap annual CAM increases, controllable costs are the only place a small-bay landlord will look, and that narrower ask occasionally lands.

Capital expenditures are not CAM, and they get billed like it anyway. A new roof or a repaved lot is a capital item, not maintenance. A well drafted lease either excludes capital work outright or amortizes it over its useful life instead of expensing the whole thing in the year it happens. On small-bay product with a short term, an unamortized roof landing in your CAM is a real risk, and it's worth one line in the LOI.

Is CAM the same as NNN?

No. CAM is one of the three nets, and NNN is all three: property taxes plus building insurance plus CAM.

The terms get swapped anyway. On a lot of small-bay product the landlord quotes one pass-through number and calls it the CAM, even though that number carries taxes and insurance inside it. The shorthand came over from retail leasing, where CAM was the dominant charge and calling the whole thing CAM was close enough to true.

That sloppiness costs the tenant money. Ask what the CAM is, get an answer covering the true CAM only, and you've underestimated your monthly cost by the tax and insurance share, which is the larger share of the three on most industrial buildings we lease. Property taxes by themselves usually run more than CAM does.

One question fixes it. Ask whether a quoted number is CAM only or all three nets, and get the answer in writing.

How NNN charges get calculated on a real lease

Take a 2,500 SF warehouse unit at $1.00/SF/MO NNN base rent. Across our own small-bay listings right now, NNN estimates mostly land between $0.20 and $0.45 a square foot per month. Call it $0.35 for this example. For what is open at that size today, see small warehouse space in Salt Lake City.

Base rent: 2,500 SF x $1.00 = $2,500 a month. NNN charges: 2,500 SF x $0.35 = $875 a month. Real monthly cost: $3,375, before your utilities.

Most business owners we talk with don't care how the monthly number splits between base rent and NNNs. They care what the check says, out the door. That's the right instinct: $3,375 is the real number here, it sits 35% above the advertised rate, and comparing two spaces on base rent alone will steer you wrong. It's also why we'd rather walk you through the NNN estimate on a specific space than print one number next to every listing: the estimate only means something next to last year's actuals and what's in the CAM budget, and that's a two-minute phone conversation. If you want rate context by size and submarket, the warehouse cost guide covers where totals are landing across the valley, and the lease calculator runs this math for any space.

NNN estimates and the year-end reconciliation

Any NNN figure you're quoted is an estimate. The landlord budgets the year's taxes, insurance, and CAM, divides by the building's square footage, and bills you monthly. At year end the books get reconciled against actual costs. Spent less than budgeted, you get a credit. Spent more, you get a true-up bill.

Two things worth doing before you sign. Ask for the prior year's actual NNN costs, because a building with a clean history of small true-ups is telling you the landlord budgets honestly. And read how escalations work: annual increases typically apply to base rent, while NNNs float with actual costs. Both numbers move, but for different reasons.

Reading the reconciliation statement

A real statement shows the line item actuals against what was budgeted, the building's total square footage, and your pro rata share as a percentage. If it arrives as one number with no backup, ask for the line item detail.

Timing is written into the lease. Most leases we see call for reconciliation inside 90 to 120 days of year end, so if it's spring and nothing has shown up, ask.

In the leases we see, you also get a right to review the landlord's books, usually for 30 to 90 days after the statement arrives. Small-bay tenants almost never use it. Knowing the clause is in there changes the tone of the conversation when a true-up looks wrong, which is most of what it's worth.

A true-up inside roughly 5% to 10% of the estimate is ordinary budgeting. A 30% true-up means the budget was optimistic or something unusual happened, and either way you're entitled to ask which.

What NNN charges don't cover

Your own utilities (power, gas, water for your suite), janitorial inside your space, your business insurance, and your phone and internet. On a warehouse with 3-phase power and equipment running, the power bill can be its own meaningful line, so budget it separately.

One more distinction worth thirty seconds: not every lease is NNN. Some smaller spaces, including office and retail units at parks like Broadbent, are quoted MG, modified gross, where some of those operating costs are baked into the quoted rate. Same building, different math. A full NNN versus gross versus modified gross comparison is its own topic, but for now the rule is simple: always ask which structure a quoted rate assumes before you compare it to anything.

Common questions

Looking at a space and the listing only shows base rent? Send it over. I'll pull the NNN estimate, ask the landlord for last year's actuals, and give you the real monthly number before you tour it, which beats finding out at the lease draft.