Practice Notes

Approved for Publication 03.08.2004

COMMERCIAL PROPERTIES COMMITTEE

Practice Note 21

REVALUATION 2005

Valuation of Nightclubs

 

1.0 INTRODUCTION

The subjects to which this Practice Note refers will embrace properties of an extremely diverse nature, from large clubs in the cities and towns that may be part of a national chain to the smaller provincial clubs.

Urban centres are the favoured locations for these subjects but because of the popularity which can be achieved by individual clubs and the extensive advertising and marketing often involved, other locations may also prove to be profitable.

 

Nightclubs are operated under licence and whilst there may be variations certain conditions must be fulfilled.

 

In the first instance the operator must apply for an "Entertainment Licence" thereby allowing the premises to be used as a nightclub and for the sale of liquor between the hours of 11.00 am and 11.00 pm. Whilst this would appear very similar to a public house licence, the main criteria used by the licensing board when issuing the relevant licence is "primary use".

 

Therefore an "Entertainment Licence" will only be granted for the premises if the board deems that the sale of liquor is secondary to the provision of a dance/music venue.

 

Following from this the nightclub operator will then make an application for a "Regular Extension to Hours" to accompany the "Entertainment Licence". In general the permitted operating hours are a matter for the local licensing board and may vary throughout Scotland. The extension of hours is usually until 2.00 am or 3.00 am.

 

2.0 BASIS OF VALUATION

All subjects in this group should be valued using the comparative principle. Rents should be analysed in terms of Basic Principles Committee, Practice Note 1.

 

If sufficient rental evidence is found in any valuation area to allow nightclubs to be valued by reference to their own rental evidence then this evidence should be followed.

 

With the increasing trend of town centre public houses applying for, and being granted, Entertainment Licences and "Regular Extension to Hours" there is a need to ensure consistency between the valuation of a public house with an "Entertainment Licence" and an extension of opening hours, and a nightclub where the physical characteristics between the two are similar.

 

When valuing these subjects consideration may be given to Commercial Subjects Committee Practice Note 17, Valuation of Licensed Premises.

 

3.0 SURVEY AND MEASUREMENT

Nightclubs should be measured on a gross internal basis. All areas should be measured and areas calculated, however not all areas will be included in the valuation.

 

Areas that should be included are all bar areas, dance floor and surround areas, dining areas, function suites, balconies.

 

Areas to be excluded are toilets, cellarage, storage, staff rooms, stairs, entrance vestibules and passages.

 

The areas to be included should be adjusted as below to produce a reduced area for the valuation of the subject.

Adjustments

 

4.0 RECOMMENDED RATES

In the absence of local evidence, it is recommended that in the larger towns or cities rates between £100/m² and £200/m² should be applied to the reduced area of the subject.

 

For nightclubs in smaller towns, where there is insufficient local evidence, rates between £50/ m² and £100/m² are recommended.

 

Before adopting a particular rate, each Assessor is encouraged to consult with his neighbouring Assessor(s) to ensure that consistency of approach is adopted.