Distribution warehouses
Source: gov.uk (2025-06-05)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This guidance applies to distribution warehouses. As a rule, a size threshold will apply to this class in the market and properties may be defined as ‘last mile delivery’ (generally under 5,000m2) or ‘distribution hubs’ (8,000m2). However, regardless of size certain key features, as set out in the Practice Note, will define the property as a distribution warehouse.

2. List Description and Special Category Code

3. Responsible Teams

The valuation of this class of property is the responsibility of the Industrial, Commercial and Crown team within the National Valuation Unit (NVU).

4. Co-ordination

The Combined Industrial Class Co-ordination Team (CCT) has overall responsibility for the co-ordination of this class.

The team are responsible for the approach to and accuracy and consistency of valuations. The team will deliver practice notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists.

Caseworkers have a responsibility to:
- follow the advice given at all times
- not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
- seek advice from the co-ordination team before starting any new work
5. Legal Framework

There is no specific legal framework for this class.

6. Survey Requirements

Distribution 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.

The VOA publish the relative scales to be used when valuing different parts of the hereditament. These can be found here Valuation scales 2023 - GOV.UK (https://www.gov.uk/government/publications/valuation-scales-2023)

7. Survey Capture

Rating surveys should be captured on the Rating Support Application (RSA). Rateable Plant and Machinery (P&M) on site must be recorded on the Non-Bulk Server (NBS). An example of some common items of P&M that may be found in this class of property are fire protection systems, perimeter security, back-up generators and CCTV.

Plans and surveys should be stored in the appropriate folder within the Electronic Document Records Management (EDRM) system.

8. Valuation Approach

Rental and rental comparison approaches should be used to value this class of property with the appropriate adjustments made.

Please refer to the Practice Notes for each rating list for details of how the valuation schemes deals with issues such as eaves height and quantum.

If in doubt, the class co-ordination teams are available to assist with guidance.

9. Valuation Support
- Rating Support Application
- Class co-ordination team
- Non-bulk server
Appendix 1 - inspections

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 (https://hmrc.sharepoint.com/sites/COM155566830/SitePages/Code-of-Measuring-Practice%20-%20Introduction.aspx).

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. Health & Safety implications can be found here: Outdoor Health and Safety - Personal Protective Equipment (https://hmrc.sharepoint.com/sites/COM155566891/SitePages/Personal-protective-equipment-(PPE)-Background-Advice.aspx).

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. (https://assets.publishing.service.gov.uk/media/63bee837d3bf7f6c27b46c72/RM380_appendix_1_Image1.jpg)

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. (https://assets.publishing.service.gov.uk/media/63bee879e90e0771b49f1cbb/RM380_appendix_1_Image2.jpg)

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. (https://assets.publishing.service.gov.uk/media/63bee89ed3bf7f6c2065dc66/RM380_appendix_1_Image3.jpg)

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.

Practice note: 2023 - distribution warehouses

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.

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.

Appendix 1 - Quantum allowances

For the 2023 Rating List the national agreement is as follows:

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.

Appendix 2 - Eaves height adjustments

For the 2023 Rating List the national agreement is as follows:

2023 Rating List

Practice note: 2017 - distribution warehouses

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.
- distribution warehouses with a base price of £50 and above – Fire protection 2.5% and Air conditioning 5%
- 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.

Practice note: 2017 - Appendix 1: Quantum allowances

The national agreement is as follows:

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.

Appendix 2 – Eaves Height Adjustments

For the 2017 Rating List the national agreement is:

2017 Rating List