Factories, workshops and warehouses
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
1.1 This guidance applies to factories, workshops and warehouses, there are separate practice notes for food processing centres, creameries, large distribution warehouses and large industrials linked to this section.
Wholesale warehouses (Scat 301), self-storage hereditaments (Scat 721) and builders merchants (Scat 994) are the subject of separate manual sections.
| Property Type | Bulk Class | Primary Description Code | Scat Code | Scat Suffix |
| Factories, workshops and warehouses | F | CG1 | 096 | G |
| Large distribution Warehouses | CW | CW | 151 | S |
| Large industrials | F | IF | 153 | S |
| Creameries | IX | IX | 079 | S |
| Food processing centres | F | IF | 203 | G/S |
3.1 Factories, workshops and warehouses are a generalist/regional class, large distribution warehouses are dealt with by the specialist/national teams.
3.2 It is recommended that each Unit should allocate a named co-ordinator to act as a point of contact within the Unit. This lead valuer will assist in the delivery of the Unit’s valuation scheme and also for liaising on value and technical issues with other lead valuers across adjoining Units.
Factories, workshops and warehouses (SCAT 096) fall within the responsibility of the Regional Industrial Class Coordination Team (CCT), along with many sub classes (e.g. Builders merchants, Tyre and exhaust Centres, Wholesale warehouses). Large distribution warehouses and Large industrials fall within the responsibility of the Industrial specialist - rentals CCT.
Caseworkers have a responsibility to:
- follow the advice contained within the Rating Manual and relevant practice note
- seek advice from the co-ordination team before starting on any new work
- not to depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
There is no specific legal framework for this class.
Factories, workshops and warehouses should be measured and valued to Gross Internal Area (GIA) having regard to the definitions contained in the VOA Code of Measuring Practice for Rating Purposes.
Rating surveys should be captured on the Rating Support Application (RSA). Plans and surveys should be stored in appropriate folder within the Electronic Document Records Management (EDRM) system.
Rental and rental comparison approaches should be used.
Rental evidence for this type of hereditament exists. The class co-ordination teams are available to assist with rental analysis for the sectors covered by a CCT.
- Rating Support Application (RSA)
- Class co-ordination team (CCT)
1. Market appraisal
1.1 The distribution market continued its robust upward curve through 2018 and into 2021. The ongoing growth in e-commerce combined with a relatively modest increase in supply of Grade A units (new and prime located) has resulted in significant rental growth in both prime and secondary properties. Occupier demand continues to be dominated by high street retailers, grocers, e-commerce and manufacturers.
1.2 The impact of the COVID pandemic on industrial property values was marked by considerable variation between sectors. In the large distribution warehouse industry media comment around the Antecedent Valuation Date (AVD) focused on the shortage of available warehouse space at a time of hugely increased demand.
2. Changes from the last practice note
2.1 The approach to fire protection and air conditioning has been reviewed. The former two-tier approach adopted for the 2010 and 2017 Rating Lists is now replaced by a single tier system, +2.5% for fire protection and +5% for air conditioning.
The addition for fire protection will include water tanks and ancillary items. These should not be added as additional plant and machinery.
3. Co-ordination
3.1 Large Distribution Warehouses (total significant area over 8,000m2) are a specialist class dealt with by the National Valuation Unit. Estates of mixed size where units below 8,000m2 fall to be dealt with by the Regional Valuation Unit must be closely coordinated and advice must be sought from the National Valuation Unit to ensure valuation consistency.
4. Ratepayer discussions
4.1 No ratepayer discussions have taken place for the 2023 list with ratepayers or industry representatives.
5. Valuation scheme
5.1 The rentals comparison method should be utilised in valuing this class for rating purposes.
5.2 Significant rental evidence is available for this class of property, but care must be taken not to accept the headline rents at face value. When considering the evidence from new lettings rents will commonly require adjustment to take account of rent free periods, capital payments, stepped rent arrangements or other incentives. Lettings are often on the basis of minimal fit out and adjustment for tenants’ improvements will generally be required.
5.3 Primary value determinants will be size, eaves height, loading facilities and location. Access to the motorway network and major arterial roads is key to what rent might be achieved.
5.4 Rental evidence indicates that in the vast majority of locations the base rate applied to Large Distribution Warehouses will be in excess of local warehouse tone. Accordingly, levels of value for this class must be derived from rental evidence on Distribution Units and not indirectly from local industrial values.
1 Market appraisal
1.1 Department for Environment Farming and Rural Affairs (DEFRA) is the government body responsible for regulating the dairy farming industry.
1.2 DEFRA produce data sets detailing milk availability, milk uses, production and pricing.
1.3 Official statistics show UK average milk prices (farm-gate price) at the antecedent valuation date (AVD) in April 2021 was 29.41 pence per litre. This compares to 24.69 pence per litre in April 2015.
1.4 The price of milk is an important factor in driving milk and cheese industry revenues. Other factors include the bargaining power of downstream retailers (supermarkets), consumer health trends and the value of sterling.
1.5 Britain’s dairy industry renowned for its quality, is well placed to grasp the opportunities that the increasing demand for milk and dairy products provides.
1.6 The impact of the COVID pandemic on industrial property values was marked by considerable variation between sectors. Demand for dairy products remained strong during the pandemic. Media reports indicate that loss of demand from food service outlets that were forced to close was offset by an increase in demand from supermarkets and other large retail outlets. Farmgate milk prices recovered towards the end of 2020 and broadly remain at pre-pandemic levels in 2021.
1.7 Current market conditions driving industry consolidation have resulted in increased capital investment. Many occupiers have upgraded or expanded existing facilities as they continue to seek economies of scale and increased efficiencies.
1.8 Market evidence for creameries that reflect bespoke fit out for dairy production will be extremely rare. It is typical for occupiers to design and build bespoke facilities or take shell units and fit them out to their particular requirements.
2 Changes from the last practice note
There have been no changes since the last practice note.
3 Ratepayer discussions
There have been no discussions with ratepayers.
4 Valuation Scheme
4.1 The basis of valuation is by rental comparison. Rental evidence is limited, but it does indicate an uplift in value for specialised fit out over and above that of equivalent industrial premises.
4.2 Values will generally be drawn from the local industrial tone with appropriate adjustments to reflect the inherent characteristics of creameries. These will include clean production areas, chilled and cold storage areas and specialist high bay areas.
4.3 The tone will be adjusted to reflect the individual characteristics of each property in respect of common issues effecting industrials such as age, modernity and layout.
4.4 All creameries must have a common sub location code linked to an address matrix. The sub location code to use is 3CRM. The valuation scale is V1FGIA1 used for industrial property measured to GIA.
4.5 Care must be taken to align values with those produced by size based matrices in use by Regional Valuation Units, so as to avoid, as far as possible, illogical steps in value at the margins.
4.6 All valuations of creameries should be individually reviewed to ensure consistency and quality.
4.7 Additions for car parking are reflected unless the local tone from which the unit rate is derived makes an addition for car spaces.
4.8 Land (as an ancillary to an industrial hereditament)
The Valuation Support Application (VSA) standards definition requires that all land within a hereditament is identified and appropriately captured. This will ensure that no “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage. It should be captured as an “other addition” using the relevant Other Allowance (OA) code
4.9 Eaves Height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local market interpretation issue. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
|---|---|---|---|
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m | Plus 10% pro-rata* in range 6 to 10m (2.5% per metre and 1% per metre thereafter | Less 10% pro-rata* in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical older style (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | Similar to above |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
*Where an adjustment is required, the adjustment code HRM+/- should be applied to line entries or survey units as appropriate.
It is recommended that the adjustments for height in all creameries should be checked in a reconciliation exercise. This is to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data.
4.10 Specialised buildings
Some sites will have a Spray Drier or Evaporator tower. These are very tall buildings to accommodate the specialised plant items and or process. The following adjustments to the main space rate have been agreed with ratepayer representatives in previous lists to reflect the particular attributes. It is recommended these adjustments are followed for this list.
- headroom 16.5m – 19.5m – factor for 2.00
- headroom 20.0m – 24.5m – factor for 2.50
- headroom 25.0m – 30.0m – factor for 2.75 to 3.00
4.11 Fire prevention (sprinklers)
A value addition should continue to be applied by recording “A” or “M” as appropriate in beacon characteristics a line entry or survey unit adjustment code FPT+ is also required. The factor applied is 1.05. Where tanks and pumps are present in support of the system, these must be valued as plant and machinery in accordance with the VOA Cost Guide.
If cost evidence for a specific installation is put in evidence this may be used as a better indication of value, once it has been adjusted and decapitalised at the statutory decapitalisation rate.
4.12 Heating
In the absence of contrary information, creameries should be assumed to be unheated and valued accordingly. It is likely that heating will be a tenant’s addition unless scrutiny of the individual facts reveals otherwise.
4.13 Air conditioning
Where this is present in ancillary office areas, a line adjustment of AIR+ should be recorded in the valuation. This will value add 10% to the line value.
If air handling systems serve production areas then they may be used in connection with a manufacturing operation or trade process and qualify for exception within class 2 of the Valuation for Rating Plant and Machinery Regulations 2000.
In cases of doubt please discuss with your Technical Advisor or National Valuation Unit Industrial Commercial and Crown team.
4.14 Plant and machinery (P&M)
Items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual and the R2023 Cost Guide.
The 2023 prescribed rate of decapitalisation should be applied where appropriate.
4.15 Food processing, chilled and cold areas
Areas benefitting from ‘white wall’ food processing production fit out must be captured using accommodation use class coded as FPA (food). A factor of 1.15 should be used.
Areas used as Chill stores should be captured using accommodation use class code CHL (Chill). A factor of 1.15 should be used.
Areas used as Cold stores should be captured using accommodation use class code CLD (Cold). A factor of 1.30 should be used.
Also refer to Rating Manual : Cold Stores.
4.16 Cases of doubt should be referred to National Valuation Unit Industrial Commercial and Crown team.
1 Market appraisal
1.1 This Special Category Code (Scat) covers a wide range of industries. As with other developments between the previous Antecedent Valuation Date (AVD) and the present one of 1 April 2021, the impact of the Covid pandemic on industrial property values was marked by considerable variation between sectors. Given these differences in effect it is not possible to offer a meaningful commentary on such matters for this Scat.
2 Changes from the last practice note
2.1 There have been no changes since the 2017 Practice Note.
3 Ratepayer discussions
3.1 There have been no ratepayer discussions.
4 Valuation scheme
4.1 All industrials larger than 20,000m² have a common 3IND sub location code linked to age-related address matrices. Measurement for large factories is to GIA. The Rentals valuation is the preferred method of valuation. It should be noted that a range of industrial hereditaments of this size (for example distribution warehouses, abattoirs and breweries) are subject to their own Scat-specific guidance – for the avoidance of doubt, in such cases that guidance should be followed instead of this Practice Note.
4.2 Car Parking
4.2.1 Car parking should be “inclusive”, and the reflected table should form part of all access paths.
4.2.2 It is accepted that in certain circumstances it may be appropriate to deduct for ‘lack of adequate parking provision’ and there may be some cases where an addition could be appropriate - but these will be exceptions.
4.3 Land (as an ancillary to an Industrial hereditament)
4.3.1 The Valuation Support Application (VSA) standards definition requires that all land within a hereditament is identified and appropriately captured.
4.3.2 The area of land to be recorded is the total area within the perimeter fence less the building footprint, roads, car parking and unusable areas such as steep banking or narrow perimeter paths. No attempt should be made to imply a standard amount for access/parking by reducing this area by an arbitrary percentage.
4.3.3 Any land that the market would consider to be over and above the norm for the locality should be valued accordingly.
4.4 Eaves Height
4.4.1 The effect on value of an eaves height greater or less than ‘normal’ is essentially a local market interpretation issue.
4.4.2 It is recommended however that the adjustments for height in all large Industrials should be checked in a reconciliation exercise to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of space | Standard height | Height greater than standard | Height less than standard |
|---|---|---|---|
| Typical ‘modern’ Standard say 1990+ | Range of about 4.0m to 6.0m. Some localities may have taller (or lower) units as standard. | Unless evidence indicates otherwise, add 2.5% per m (pro rata) up to 10m and 1% per metre thereafter. | Less 10% pro-rata in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment. |
| Typical single storey space of 1930s + vintage (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | Similar approach to above taking care to consider what is normal in the locality. |
| Old space/multi-storey | No specific standard | No addition. | No general reduction. |
4.5 Fire Protection (FPT)
4.5.1 A ‘scheme’ value addition should continue to be applied through the line entry or survey unit adjustments, the FPT factor for this class is 1.05. Where tanks and pumps are present in support of the system, these must be valued as additional plant and machinery in accordance with the VO Cost Guide.
4.5.2 If cost evidence for a specific installation is put in evidence, this may be used as a better indication of value.
4.6 Heating
4.6.1 All large industrials are assumed to be heated and unit rate adopted reflects this.
4.6.2 It is likely that heating will be a tenant’s addition - this should be considered in rental adjustment and analysis.
4.7 Air Conditioning
4.7.1 Where present in office areas it should be valued at a factor of 1.10. Air conditioning (AIR) is distinct from air handling (ducted air circulation) which is reflected in the adopted UAR.
4.7.2 If air conditioning systems are used in connection with a manufacturing operation or trade process they may qualify for exception within class 2 of the Plant and Machinery Regulations. See Jane Berry (VO) v Iceland Foods Ltd RA/61/2012. In cases of doubt refer to National Valuation Unit Industrial Commercial and Crown (NVU ICC) team.
4.7.3 As with sprinkler systems, evidence from actual installation costs may be preferred over the scheme addition for air conditioning.
4.8 Plant and Machinery (P and M)
4.8.1 The common items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. This list is not exhaustive. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual and the Cost Guide.
4.8.2 The statutory decapitalisation rate must be used.
4.9 Food processing and other clean manufacturing areas
4.9.1 Areas benefitting from ‘white wall’ food processing or clean production fit out must be coded as either accommodation use FPA (Food Processing Area) or LAB (Laboratories). A factor of 1.15 should be used for FPA ground floor areas. The factor to be adopted for clean production will depend on individual specification.
4.9.2 See separate practice note for food processing hereditaments.
4.9.3 Cases of doubt should be referred to NVU ICC team for advice.
1. Overview
1.1.The VOA standard of measurement for factories, workshops and warehouses is Gross Internal Area (GIA). An explanation of measurement to GIA can be found in the VOA Code of Measuring Practice for Rating.
1.2. The Code of Measuring Practice e-learning provides useful information on measuring industrials and can be found on the NDR Learning Homepage.
1.3. Industrial properties come in all shapes and sizes, from small workshops to huge manufacturing sites. There are many hazards to consider so you must follow the site rules and use your personal protective equipment.
2. External features
2.1 The Site
A pen picture should be provided of the locality that notes the following:
- Location
- Situation
- Advantages
- Disadvantages
2.2. An example might be:
“The property is situated on an established industrial estate with good access via an existing made-up road also serving other parts of the estate. There are good main road and rail links nearby but parking on site is limited.”
3. Access, loading and unloading facilities
3.1. Ease of access to and within the property should be noted. The height and width of all access doors must be recorded, together with details of construction and the method of operation (e.g. metal roller shutter, electrically operated). The presence of dock levellers should be noted.
3.2. The position of all access doors must be shown on the plan and any problems with access that may affect loading and unloading or general access recorded.
3.3. The height and width of access doors is important not only to the daily operations at the property but also with regard to plant and machinery.
4. Car Parking
4.1. Note the number of allocated car spaces or calculate the approximate size of the overall parking area together with details of the surface finish.
5. Ancillary Storage Land
5.1. Any ancillary storage land should be measured separately and the surface finish noted. Any land suitable for storage, which is unused, should also be recorded. Ask the occupier if the land is used exclusively by them or is shared. If shared make a note of the area and details of the other occupiers.
5.2. It is important to be aware that there are many different approaches to the way in which ancillary land is valued. It is important to be aware of which approach applies to each area. If in doubt please ask your technical advisor.
5.3. Where there are temporary buildings, cabins and/or storage containers (SCN) etc. located on land, then the area of this land must not be deducted. The value of the temporary buildings and/or storage containers and the like, must be added in addition to the land value. Depending on the circumstances, this can be done in the valuation either by a suitable line entry or by using other additions. Other additions is the preferred approach.
6. Age
6.1. It is important to correctly identify the age of any property when carrying out an inspection. The occupier should be able to give you information on the age of the property. If you are unable to obtain this information take photographs to allow identification. The Industrial Age Recognition Guide is a useful tool to help identify the age of your industrial property.
7. Internal features
7.1 Ancillary Accommodation
You should note any ancillary accommodation that may be available e.g. office space, toilets, washrooms, canteens etc.
7.2. Measuring to GIA, ancillary accommodation within the same building may not need to be separately measured if it is of similar quality and value as the main space. Only note the facilities and finish.
7.3. Office space within solid walls or on mezzanine/1st floors, or areas of differing quality will need to be measured.
8. Heights
8.1. The height of an industrial property can have a significant effect upon the value. Eaves height is often used in industrial scales to determine value.
8.2. To record a height note it on the plan at the point it was measured and circle it to distinguish it from the linear measurements.
8.3. The following diagrams show three different types of height in traditional and modern industrial units. The Inspection Checklist only requires you to note the eaves height, which should be measured internally. If the clear height is significantly lower than the eaves height, this might affect the value of the property so should also be recorded.
Diagrams of three different types of height in traditional and modern industrial units.
The following diagrams are added for clarity and show the points of measurement for internal eaves height and clear height. It is worth noting that some letting brochures will only state clear height (measured to the underside of the eaves haunch).
Diagrams of the points of measurement for internal eaves height and clear height.
8.4. Definitions of heights can be found in the VOA Code of measuring practice: definitions for rating purposes. Those for internal eaves and clear height are reproduced below.
8.5. Internal eaves height: the height between the floor surface and the underside of the roof covering, supporting purlins or underlining (whichever is the lower) at the eaves on the internal wall face.
8.6. Clear height: the height between the floor surface and the lowest part of the roof trusses, ceiling beams, roof beams or haunches at the eaves.
8.7. The RICS code of measuring practice has similar definitions with an explanatory diagram which is shown below for reference.
Explanatory diagram for RICS code of measuring practice.
8.8. There may be a number of buildings on the site all with different internal eaves heights in which case separate survey units may be needed to record differing heights.
9. Floor
9.1. Differences in the loading capacity of floors should be recorded. Limitations on the load carrying capacity of the floors (particularly 1st floors and mezzanine storage platforms) should be noted, where available, as this may restrict the full use of the floor.
10. Mezzanine
10.1. A Mezzanine is a “Supported First Floor” (SFF) a floor or series of floors installed independently inside part of the of the main building.
10.2. The construction details, method of access and the clear height above and below the SFF should be recorded, the area below is usually shown as a separate item and deducted from the overall GIA of the ground floor.
10.3. Where possible you should record the load carrying capacity of the Mezzanine floor. This can usually be found on a plate attached to the steel support framework.
11. Bay widths and stanchion grids
11.1. A note should be made of any item, which restricts clear floor space. Columns, piers, pillars, stanchions etc are all included within the GIA and there is no need to take individual measurements of these features. The number, their approximate positions and sizes should be shown on the plan. Where pillars or stanchions form a grid within an area the grid widths should be shown.
12 Lighting
12.1. The provision of natural and artificial lighting must be recorded. For example ‘’Clear Perspex roof panels and suspended strip lights’’.
13. Plant and machinery
13.1. Industrial property, particularly workshops and large factories, are the bulk property where the majority of Plant & Machinery can be found.
1. Market appraisal
There have been no transactions on which to base an evidenced view of the market. Majority of sites are freehold and where rented can be subject to significant variations due to wider financial and business specific issues.
2. Changes from the last practice note
No practice note (PN) was produced for the 2010 Revaluation.
3. Ratepayer discussions
There have been no discussions with ratepayers.
4. Valuation scheme
The rental comparison method should be adopted with each property to be individually valued having regard to local industrial / large industrial tones with appropriate adjustments to reflect inherent characteristics – FPA, CHL, CLD etc. Similar underlying issues to other industrials / large industrials such as age, modernity, layout etc.
All creameries must have a common sub location code linked to an address matrix.
The sub location code to use is 3CRM.
It is appreciated that this has certain implications
Care must be taken to align values with those produced by size based matrices in use by Units, so as to avoid, as far as possible, illogical steps in value at the margins.
All valuations of creameries should be individually reviewed to ensure consistency and quality.
Car parking
Car parking should be “inclusive” and the reflected table should form part of all access paths.
It is accepted that in certain circumstances it may be appropriate to deduct for ‘lack of adequate parking provision’ and there may be some cases where an addition could be appropriate - but these will be exceptions.
Land (as an ancillary to an Industrial hereditament)
The VSA standards definition requires that all land within a hereditament is identified and appropriately captured.
This will ensure that:
No “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage
It should be captured as an “other addition” using the relevant OA code.
Valuation scale
VVFGIA1 should be used in all cases.
Eaves height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local Market Interpretation issue.
It is recommended however that the adjustments for height in all creameries should be checked in a reconciliation exercise to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m | Plus 10% pro-rata* in range 6 to 10m (2.5% per meter and 1% per metre thereafter | Less 10% pro-rata* in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical older style (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | similar to above |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
*Where an adjustment is required, the adjustment code HRM+/- should be applied to line entries or survey units as appropriate
Specialised buildings:
Some sites will have Spray Drier / Evaporator tower / buildings which are very tall buildings to accommodate the specialised plant items and or process. The following adjustments have been agreed to reflect the particular attributes:-
- Headroom 16.5m – 19.5m – factor for 2.00
- Headroom 20.0m – 24.5m – factor for 2.50
- Headroom 25.0m – 30.0m – factor for 2.75 to 3.00
Fire Prevention (Sprinklers)
A value addition should continue to be applied by recording “A” or “M” as appropriate in Beacon characteristics A line entry or survey unit adjustment code FPT+ is also required. The factor applied is 1.05. Where tanks and pumps are present in support of the system, these must be valued as plant and machinery in accordance with the VO Cost Guide.
If cost evidence for a specific installation is put in evidence, this may be used as a better indication of value, once it has been adjusted and decapitalised at the statutory decapitalisation rate.
Heating
All Creameries should be assumed to be “unheated” and priced accordingly. It is likely that heating will be a tenant’s addition, unless scrutiny of the individual facts reveals otherwise.
Air Conditioning
Where this is present in ancillary office areas, a line adjustment of AIR+ should be recorded in the valuation. This will value add 10% to the line value.
If air handling systems serve production areas then they may be used in connection with a manufacturing operation or trade process and qualify for exception within class 2 of the Plant and Machinery Regulations. In cases of doubt refer to NSU Industrial and Crown Team.
Plant and Machinery (P&M)
The common items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual, using the P&M section of the Non-bulk server and the ARC then transferred to RSA.
The Statutory Decapitalisation rate must be used.
Food Processing, Chilled and Cold areas
Areas benefitting from ‘white wall’ food processing production fit out must be captured using accommodation use class coded as FPA (food). A factor of 1.15 should be used.
Areas used as Chill stores should be captured using accommodation use class code CHL (Chill). A factor of 1.15 should be used.
Areas used as Cold stores should be captured using accommodation use class code CLD (Cold). A factor of 1.30 should be used.
Cases of doubt should be referred to NSU Industrial and Crown team for advice.
1. Market appraisal
1.1 Rental evidence remains patchy but generally throughout the period from late 2008 to 2010 the market was distinctly depressed with values generally falling. The low point was probably 2009 to 2010 but the market picked up a little from 2011. The values of prime stock as at 2015 are now broadly equivalent to those of 2008 with the possibility of some rental growth in the best locations. Wales remains the weakest performing region where prime levels are possibly down on 2008 levels.
1.2 Secondary and older stock in all areas is likely to show rental levels below those of 2008. Evidence of lettings of tertiary and old stock is rare but asking rents are often below 2008 levels.
2. Changes from the last practice note
There was no practice note for this class for 2010 but the valuation approach is unchanged from 2010 and previous lists. The approach is that of direct rental evidence or by rentals comparison. Comparison with adjoining regions should also be made so that there is a smooth transition in values from one area to another.
3. Co-ordination
Large distribution warehouses (total significant area over 8,000m2) are a specialist class dealt with by the National Valuation Unit (NVU). Estates of mixed size where units below 8,000m2 fall to be dealt with by the Regional Valuation Unit must be closely coordinated and advice must be sought from the NVU to ensure valuation consistency.
4. Ratepayer discussions
No ratepayer discussions have taken place for the 2017 list with ratepayers or industry representatives.
5. Valuation schemes
5.1 Rental evidence is available for this class of property and the rentals comparison method should be utilised in valuing this class for rating purposes.
In the 2005 Rating list quantum allowances were provided for by reference to a memorandum of agreement, where appropriate and this was carried forward to the 2010 list. This should be continued in accordance with the memorandum. Please follow this link. Similarly a memorandum of agreement was reached in respect of oversupply for the 2005 list however this is not now judged to be the case for subsequent lists. Consequently this allowance should not be applied as at Revaluation the levels of value adopted reflect the supply.
5.2 Values are regionally based and will vary widely across the country and by reference to how well the hereditaments are served by motorways, arterial roads and their closeness to docks and the market. When considering the evidence from new lettings rents will often require adjustment to take account of rent free periods, capital payments, stepped rent arrangements or other incentives. Lettings are often on the basis of minimal fit out and adjustment for tenants’ improvements will generally be required. Adjustments for height, end and other allowances should be as for the 2010 list.
5.3 Clad rack warehouses, the value of this class was recently tested in litigation the outcome of which was that while the feature is rateable as ‘a building’ no premium value should be applied over standard warehousing except the additions for extra height, which may be considerable, and other standard features such as fire protection, heating and so on.
5.4 For the 2010 Rating List a two tier addition for fire protection and air conditioning was agreed. This agreement will continue for the 2017 Rating List.
- large distribution warehouses with a base price of £50 and above – Fire protection 2.5% and Air conditioning 5%
- large distribution warehouses with a base price below £50 – Fire protection 3% and Air conditioning 10%
The addition for fire protection will include water tanks and ancillary items. These should not be added as additional Plant and Machinery.
The national agreement is as follows
| Adjusted GIA (m2) | % end allowance |
| 50,000- 51,000 | -1% |
| 51,001- 52,000 | - 2% |
| 52,001- 53,000 | - 3% |
| 53,001- 54,000 | - 4% |
| 54,001- 65,000 | -5% |
| 65,001-66,000 | - 6% |
| 66,001-67,000 | -7% |
| 67,001-80,000 | -8% |
| 80,001-90,000 | -9% |
| 90,001-100,000 | -10% |
| Beyond 100,000 | on merit |
Note 1. Adjusted Gross internal area (GIA) for the purpose of this agreement means, the total GIA as defined in the RICS/VOA Code of Measuring Practice but then excludes mezzanines and canopies and any other elements of the accommodation which have a valuation factor applied of less than 0.3.
1. Market appraisal
The transaction evidence analysed so far is unrevealing, although it is thought that the older stock will continue to lag behind.
2. Changes from the last practice note
No Practice Note (PN) was produced for the 2010 Revaluation.
3. Ratepayer discussions
There have been no discussions with ratepayers.
4. Valuation scheme
All industrials larger than 10,000m2 must have a common sub location code linked to an address matrix.
The sub location code to use is LGIN.
It is appreciated that this has certain implications -
Care must be taken to align values with those produced by size based matrices in use by Units, so as to avoid, as far as possible, illogical steps in value at the margins.
All valuations of large Industrial hereditaments, as defined above should be individually reviewed to ensure consistency and quality.
4.1 Car parking
Car parking should be “inclusive” and the reflected table should form part of all access paths.
It is accepted that in certain circumstances it may be appropriate to deduct for ‘lack of adequate parking provision’ and there may be some cases where an addition could be appropriate - but these will be exceptions.
4.2 Land (as an ancillary to an Industrial hereditament)
The VSA standards definition requires that all land within a hereditament is identified and appropriately captured.
This will ensure that:
No “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage
4.3 Eaves Height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local market interpretation issue.
It is recommended however that the adjustments for height in all large Industrials should be checked in a reconciliation exercise to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m. Some localities may have taller (or lower) units as standard. | Unless evidence indicates otherwise, add 2.5% per m (pro rata) up to 10m and 1% per metre thereafter. | Less 10% pro-rata in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical single storey space of 1930s + vintage (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | Similar approach to above taking care to consider what is normal in the locality. |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
4.4 Fire Prevention (Sprinklers)
A ‘scheme’ value addition should continue to be applied through the line entry or survey unit adjustments, the factor should be 1.05. Where tanks and pumps are present in support of the system, these must be valued as additional plant and machinery in accordance with the VO Cost Guide.
If cost evidence for a specific installation is put in evidence, this may be used as a better indication of value, once it has been adjusted and decapitalised at the statutory decapitalisation rate.
4.5 Heating
All Large Industrials should be assumed to be “heated” and priced accordingly. This will follow the approach used in the Units.
It is likely that heating will be a tenant’s addition, this will be taken into account in rental adjustment and analysis.
4.6 Air Conditioning
Where this is present in ancillary office areas it should be valued at a factor of 1.10.
If air handling systems serve production areas then they may be used in connection with a manufacturing operation or trade process and qualify for exception within class 2 of the Plant and Machinery Regulations. In cases of doubt refer to NSU Crown and Industrial Unit. Where rateable A/C is present in production areas apply a factor of 1.10.
As with sprinkler systems, evidence from actual installation costs may be preferred over the ‘scheme’ addition for A/C.
See Jane Berry (VO) v Iceland Foods Ltd RA/61/2012
4.7 Plant and Machinery (P&M)
The common items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual and the Cost guide.
The Statutory Decapitalisation Rate must be used.
4.8 Food Processing and other “clean” Manufacturing areas
Areas benefitting from ‘white wall’ food processing or ‘clean’ production fit out must be accommodation use coded as FPA. A factor of 1.15 should be used.
See separate Practice Note for food processing hereditaments.
Cases of doubt should be referred to NVU Industrial and Crown team for advice.
1. Market appraisal
The appetite for ready meals, both chilled and frozen, remains healthy in the UK. Some reports put the total UK spend on this sector at around £2.5bn in 2013.
Production techniques are labour intensive and it is not unusual to find that producers cluster together in a locality to take advantage of local labour markets, some industrial estates may be dominated by food producers.
Rent reviews and new lettings that reflect the bespoke fit out for food production will be extremely rare, it is typical for occupiers to take shell units and fit them out to their particular requirements.
Food processing will clearly encompass a wider range of occupier than cook/chill ready meals, there are some overlaps with dairies, bakeries, meat slaughter and meat processing.
2. Changes from the last practice note
No Practice Note (PN) was produced for the 2010 Revaluation.
3. Ratepayer discussions
There have been no discussions with ratepayers.
4. Valuation scheme
The basic values will generally be drawn from the local industrial/warehouse matrices.
Fitting Out: Food Processing and “Clean” Areas
Food processing and production generally requires specialised fit out, which may include:
- ‘Clean’ areas for processing/production comprising specialised wall, floor and ceiling finishes.
- Air handling systems to clean and filter air.
- Enhanced drainage and waste water treatment.
- Cold and chilled storage.
- Segregated ‘air locked’ staff changing facilities.
- Access corridors and stairs dedicated to accessing ‘clean’ areas.
It is important to properly account for the extent of tenant’s fit out when analysing and adjusting rents and subsequently valuing the hereditament. Care should be taken to identify the tenant’s fit out works. It is not uncommon for first floor extensions for staff accommodation and changing areas for example, to be a tenant’s improvement. The appropriate measuring practice is Gross Internal Area (GIA) and this will bring into consideration areas such as corridors and stair wells which may have previously been ignored on a Net Internal Area (NIA) basis.
Areas benefitting from ‘white wall’ food processing fit out must be captured as accommodation use code FPA.
A factor of 1.15 should be applied to these FPA coded areas.
Cases of doubt should be referred to the NVU Industrial and Crown team for advice.
Car parking
Car parking should be “inclusive” and the reflected table should form part of all access paths.
It is accepted that in certain circumstances it may be appropriate to deduct for ‘lack of adequate parking provision’ and there may be some cases where an addition could be appropriate - but these will be exceptions.
Land (as an ancillary to an Industrial hereditament)
The VSA standards definition requires that all land within a hereditament is identified and appropriately captured.
This will ensure that –
No “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage
Eaves Height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local Market Interpretation issue.
It is recommended however that the adjustments for height in all large Industrials should be checked in a reconciliation exercise to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m | Plus 10% pro-rata* in range 6 to 10m and 1% per metre thereafter | Less 10% pro-rata in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical single storey space of 1930s + vintage (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | similar to above |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
If food processing is taking place in a building with taller eaves than is apparently required to house the specialised clean production areas no reduction should be entertained on that account.
Fire Prevention (Sprinklers)
A value addition should continue to be applied through the line entry or survey unit adjustment, the factor should be 1.05. Where tanks and pumps are present in support of the system, these must be valued in addition as plant and machinery in accordance with the VO Cost Guide.
Heating
In the absence of information food processing centres should be assumed to be unheated and valued accordingly.
It is likely that heating will be a tenant’s addition, unless scrutiny of the individual facts reveals otherwise.
Air Conditioning
Where this is present in ancillary office areas it should be valued at a factor of 1.10.
Air handling systems serving the ‘clean’ areas will generally not be rateable per the ‘manufacturing operations or trade processes’ exception within Class 2 of the P&M Order.
In cases of doubt please discuss with your Technical Advisor or NSU Crown and Industrial.
Other Plant and Machinery (P&M)
The common items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual.
The Statutory Decapitalisation Rate must be used in valuing P&M as an addition.