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Understanding CAM, Lock-in, Rent Escalation, and Deposit in Retail Leasing

OREA Team·

Retail leasing in India involves several commercial terms that every brand and landlord should understand before signing a lease agreement. Here's a comprehensive guide to the most important terms.

Common Area Maintenance (CAM)

CAM is a monthly charge that covers the maintenance of shared spaces — corridors, lobbies, parking, lifts, gardens, and common utilities. In malls, CAM is typically ₹30–100 per sq ft per month. On high streets, it's usually lower or sometimes included in the rent.

What CAM Typically Covers - Security and housekeeping - Common area electricity and water - Lift and escalator maintenance - Fire safety systems - Parking management

Security Deposit

The security deposit is an upfront refundable amount paid by the tenant to the landlord. In Indian retail leasing, it typically ranges from 3 to 12 months of rent. The deposit is refundable at the end of the lease term, subject to the terms of the agreement.

Lock-in Period

The lock-in period is the minimum duration during which neither party can terminate the lease. Typical lock-in periods in Indian retail leasing are:

  • High Street: 1–3 years
  • Mall: 3–5 years
  • Flagship Stores: 5+ years

Breaking the lock-in usually results in forfeiting the security deposit or paying a penalty.

Rent Escalation

Rent escalation is the pre-agreed annual increase in rent. Common structures include:

  • Fixed percentage: 5–15% per year (most common)
  • Revenue share: Percentage of store revenue (common in malls)
  • Hybrid: Minimum guaranteed rent + revenue share above a threshold

Fit-out Period

Most landlords provide a rent-free fit-out period — typically 30–90 days — for the tenant to set up the store. During this period, only CAM and utility charges are applicable.

Key Negotiation Points

  1. Length of lock-in vs total lease term
  2. Escalation rate and frequency
  3. Deposit amount and refund terms
  4. Fit-out period duration
  5. Early termination clauses
  6. Signage and branding rights

Need help navigating lease terms? Contact OREA for expert leasing advisory.