Practice Notes

Approved for Publication 15.03.2006 (R)

Commercial Properties Committee

Practice Note 6

REVALUATION 2005

Valuation of Retail Warehouses

1.0 Introduction

This practice note applies to retail warehouses of the following types:

This practice note should also be of assistance when valuing:

This practice note should not be used for the valuation of depot warehouses. The Depot concept, whilst relatively new, is becoming increasingly common and is often around 10,000 m². These depot warehouses will be valued on their own rental evidence.

2.0 Basis ofValuation

Retail Warehouses are valued on the comparative basis using rates per m² derived from local evidence. Rentals should be analysed in accordance with Basic Principles Committee Practice Note 1

In the absence of local evidence to the contrary, the following reduction factors should be applied to ancillary areas of modern purpose built retail warehouses.

Where ancillary floors exist in older, converted buildings, the appropriate reduction factor will be at the valuer's discretion.

It should be noted that for mezzanines and 1^st floors, the reduction factor of 12.5% or 15% is effectively an “extra over” and no allowance should be made to the ground floor for lack of height.

3.0 Survey and Measurement

Retail Warehouses should be measured to Gross Internal Area, as defined by the RICS Code of Measuring Practice. Survey and measurement should take separate account of items such as upper floors, mezzanines, greenhouses, canopied areas and open sales land. Where the unit is of a stand alone nature, the amount of car parking should be noted.

4.0 Basic Specification

The standard purpose built unit when let as shell whether on a retail park or stand alone is typically as follows:

Screeded concrete floor slab.

Bare concrete block or profile sheeted walls.

Roof structure unfinished internally.

Capped 415v electrical supply.

Capped water and drainage facility.

The basic unit is usually in the order of 950 m², but most modern parks have a range of unit sizes. Commonly there is a double sized unit around 1,800 - 1,900 m² plus one or two in the 2,500 - 3,500 m² range.

5.0 Tenant's Fit Out

There are three broad specification types into which fitted units can be placed.

Basic Fit Out

Glazed frontage.

High bay warehouse lighting.

Blower style heating system.

Mid Range Fit Out

As basic fit out but with floor covering and part lined walls.

Full Fit Out

Glazed frontage.

Floor covering.

Lined walls.

Suspended ceiling.

Recessed Fluorescent/Low level spots/Halogen lighting.

Effective heating system hot air, radiant panel or equivalent.

The following rates per m² should be added to the shell warehouse rate.

The appropriate addition for fit out should be added when the rents analysed are for shell units as described in 4.0.

The above additions may be depreciated in accordance with Basic Principles Committee Practice Note 1 (Paragraph 5.1.2)

Other Adjustments

In the absence of local evidence, the following allowances may be granted:

6.0 Car Spaces

Modern purpose-built retail parks are served by adequate common car parking facilities and these facilities will be reflected in the rents passing. Under these circumstances, no addition to value should be made for parking and no separate entry should be made.

7.0 Quantum

An allowance under this heading may be granted when supported by local evidence.

8.0 Plant and Machinery

Any plant in these subjects which is rateable in terms of the Valuation for Rating (Plant & Machinery) (Scotland) Regulations 2000 as amended, should be valued by reference to the relevant cost guide.