England and Wales Lands Tribunal

Nissan Motor Parts Centre BV v Peter John Reeds (Valuation Officer) [2006] EWLands RA_61_2004 (23 January 2006)

RA/61/2004

LANDS TRIBUNAL ACT 1949

RATING – valuation – 2000 rating list – large distribution warehouse on estate consisting of mainly bespoke properties – established tone – whether property suffering from disabilities so as to justify adjustments to basic tone value – held property satisfied requirements of occupier – appeal dismissed

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

LEICESTERSHIRE VALUATION TRIBUNAL

BETWEEN NISSAN MOTOR PARTS CENTRE BV Appellant

and

PETER JOHN REEDS Respondent

(Valuation Officer)

Re: Warehouse and Premises,

Plot 1300, Hunter Boulevard,

Magna Park, Watling Street,

Lutterworth, Leicestershire,

LE17 4XN

Before: N J Rose FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on 5-9 December 2005

The following cases were referred to in argument:

Howarth v Price (VO) (1965) 11 RRC 196

K Shoe Shops Ltd v Hardy and Westminster City Council [1983] RA 245

Alun Alesbury, instructed by Keeble Hawson, solicitors, of Sheffield for the appellant.

David Forsdick, instructed by Solicitor's Office, H M Revenue and Customs for the respondent.

DECISION

Introduction

1. This is an appeal by the ratepayer, Nissan Motor Parts Centre BV, against the decision of the Leicestershire Valuation Tribunal ("the VT"), determining the assessment in the 2000 rating list of a distribution warehouse at plot 1300, Hunter Boulevard, Magna Park, Watling Street, Lutterworth, Leicestershire, LE17 4XN ("the appeal property") at £1,872,000.
2. The VT's decision was dated 8 October 2004. Notice of appeal to this Tribunal was given on 3 November 2004. It indicated that the VT's determination was excessive, because it failed adequately to reflect

"inter alia the configuration of the building, the inadequate loading facilities and the excessive canopied areas."

On 28 January 2005 the respondent valuation officer, Mr P J Reeds MRICS, gave notice of his intention to respond to the appeal. He stated that the VT's decision was

"correct in fact and in law and the assessment of £1,872,000 is not incorrect or excessive."

3. By letter dated 4 March 2005 the parties were advised that the appeal had been assigned to the Tribunal's special procedure, to be case managed by a Member, and that a pre-trial review ("PTR") had been ordered to be held on 14 March 2005. The purpose of the PTR was stated to be to ensure that so far as practicable all appropriate directions were given for the fair, expeditious and economical conduct of the proceedings. The parties were asked, to the extent that they were able to do so at that stage, to identify the issues in the case. The appellant filed its statement of case with the Tribunal on 19 May 2005 and served a copy on the respondent. On 22 June 2005 Mr Reeds applied for permission to cross-appeal out of time against the VT's decision and gave the following reasons:

"The VO has considered the matters set out in the appellant's statement of case and the VT decision with counsel. The VO has concluded that it would be inappropriate for him to promote a valuation (namely that of the VT) with which he continues to disagree and that it is necessary for him to cross-appeal in order for him to put forward what he considers to be the appropriate RV for the premises. The grounds of the cross-appeal would be that the decision of the VT is erroneous and that the correct RV is £2.08m." (Emphasis added).

4. I refused this application, because the fact that Mr Reeds had not changed his mind as to the value of the appeal property, but had changed his mind about whether to seek an RV below that determined by the VT was not, in my view, a sufficiently compelling reason to admit a cross-appeal which was nearly 8 months out of time.
5. At the hearing Mr Alun Alesbury of counsel appeared for the appellant. He called one witness of fact, Mr R H Wilkinson, the appellant's head of operations in the UK, and two expert witnesses, Mr E Hine BSc MRICS and Mr A J Chapman MRICS IRRV, both of whom are partners in Fisher Hargreaves Proctor, industrial and commercial property surveyors of Nottingham. Mr Wilkinson gave evidence as to the history of the appeal property and the restrictions which the existing premises placed upon the appellant's operations. Mr Hine spoke about the general market for large scale distribution warehouses and the specific shortcomings of the appeal property in the light of market conditions at the antecedent valuation date, 1 April 1998 ("the AVD"). Mr Chapman, who heads his firm's professional department and is a rating specialist, produced a valuation of the appeal property taking account of its physical characteristics and general market condition. Counsel for Mr Reeds, Mr David Forsdick, called two expert witnesses, the first of whom was Mr Reeds himself. Mr Reeds leads a team of valuers within the Valuation Office Agency's specialist rating unit, dealing with the valuation of larger and more unusual properties for rating purposes. Mr Forsdick also called Mr R A Heeley MRICS MCIOB, head of building surveying services at the VOA, who gave evidence on building costs.
6. Mr Chapman spoke to a valuation of £1,545,000 (Appendix 1). Mr Reeds considered that the correct figure was £2,080,000. Since he was appearing as respondent only, however, his submitted valuation incorporated the end allowance of 10 per cent which had been granted by the VT to reflect the loading facilities at the appeal property, resulting in a value of £1,872,000 (Appendix 2). I inspected the appeal property, accompanied by representatives of the parties, on 13 December 2005.

Facts

7. The parties prepared a detailed statement of facts, in the light of which and the evidence, I find the following facts. Magna Park is one of the largest distribution parks in the country. It stands on the former Bitteswell Aerodrome site. The site was purchased from British Aerospace plc in 1984 by Doug Arnold who in turn sold the site to MFI Furniture Group in 1986. Upon acquisition of the site MFI proposed to develop the site over a 10 year period as a distribution complex for itself and Asda Stores Limited and applied for outline planning consent to do so. The 485 acre site was then acquired by Gazeley Properties Limited (a subsidiary of Asda Group plc) in 1987 with outline planning consent to develop provisionally 4,000,000ft2.
8. Gazeley's plan was to develop 92,902m² (1,000,000ft2) for Asda's own occupation with the remaining space to be made available as design and build packages constructed by Gazeley and all sold on long leaseholds. Shortly after acquiring the site Gazeley entered into a 10-year partnership with the Church Commissioners for England, known as the Lutterworth Partnership. In 1992, the Department of the Environment gave the go ahead for the second phase of Magna Park, increasing the anticipated size of the site from 408,770m² (4,400,000ft2) to 733,928m² (7,900,000ft2). The granting of consent on Phase 2 was accompanied by a financial commitment by the Lutterworth Partnership to build the Lutterworth bypass, which provides the development with a direct dual carriageway link to Junction 20 of the M1. In late 1998/early 1999 Gazeley acquired the Church Commissioners' half share.
9. Magna Park lies within what is often termed "the golden triangle", centred around the M1, M6 and M69 motorways. Its principal access is from junction 20 of the M1, connected by the Lutterworth bypass (A4303). Access is also provided from junction 1 of the M6 and junction 1 of the M69. The warehouse consists of an original part, built in or about 1989, and an extension constructed in 2001. Both parts are of steel framed construction and have elevations of flat composite panelling overhung by a vertical profile steel clad collar with contrasting blue trim. Internally the original warehouse is divided into two by a wall with five access points, and there is a further dividing wall between the original warehouse and the extension incorporating five access points. Within the original warehouse there are two mezzanines, one of concrete resting on a steel frame and the other forming part of an integrated storage system. Within the extension there is a further mezzanine floor, which also forms part of an integrated storage system. There is a two-storey office block attached to the north-west elevation of the warehouse, with an aluminium powder coated framed and glazed elevation. Internally the space is partitioned to form administrative offices, reception and kitchen, together with male and female toilets. Approximately half of the first floor is not fitted out and remains in a shell state.
10. In total there are eleven surface level loading bays to the appeal property. To the original warehouse there are four electronically operated high-speed roller shutter doors and two up and over insulated doors. To the extension there are five electronically operated high-speed roller shutter doors. The canopy areas have a clear height of 5.0m above ground level and are open fronted. The canopies over the loading bays are steel framed and have a profiled metal roof.
11. Externally at the entrance to the site is a small gatehouse of brick construction. There are concrete areas to the front and rear used for parking HGVs and trailers. There is a surface car park to the north-east of the warehouse, with further parking for a small number of cars to the front of the offices. The floor areas are as follows:

Original warehouse ground floor gross internal area (GIA)	22,384.00
Original building ground floor offices	1,319.60
Original building first floor offices	587.80
Original building first floor offices (shell)	731.80
Warehouse extension ground floor	15,284.40
Total	40,307.60m2
Mezzanine areas
Original building (area 1)	2,085.20
Original building (area 2)	1,270.90
Extension (level 1)	1,408.90
Extension (level 2)	1,970.10
Total	6,735.10m2
Canopied loading areas
Original building	3,271.20
Extension	4,412.30
Total	7,683.50m2
Plant room	140.20m2
Gatehouse	25.60m2
Total GIA (excluding mezzanines and canopies) is	40,473.40m2

12. The clear working height is 9.61m in the original building and 9.93m in the extension. There are 218 parking spaces in the main car park to the side of the building with a further four spaces covered by a cycle shelter. The area in front of the offices has 12 car parking spaces.
13. There are two dividing walls within the appeal property; one dividing the original warehouse in two and the other separating the original warehouse from the extension. The dividing wall between the original building and the extension is constructed of 190mm thick blockwork, in-filled between the steel columns and extending to the full height of the building. The dividing wall bisecting the original warehouse is constructed of 190 mm blockwork, in-filled between the steel columns which are at 6.18m centres, and extending to the full height of the building. There are a total of five vehicle entry doors through this wall, one of which is currently blocked by racking, and four of the bays have steel diagonal cross bracing between the columns. The main frame of the building is divided into eight main sections, each approximately 30.90m long. The steel columns at each of these points support steel roof trusses to either the original building or the steel portal frame of the extension as appropriate. Each section is then further sub-divided into five bays of approximately 6.18m. The original building has additional steel columns at the centre of each 6.18m bay that are fixed by steel cleats to the steel roof trusses. The two end bays have steel columns at the third points of each 6.18m bay. These are similarly fixed by steel cleats to the steel roof trusses. In the extension there are no intermediate columns in any of the bays. There are a number of bays to both of the internal dividing walls, where diagonal steel bracing is currently present, and in these bays additional doors could only be inserted at a higher cost.
14. The appellant is a Dutch registered company, which is part of Nissan Europe. Nissan Europe is in turn a subsidiary of Nissan Motors Limited, based in Tokyo. The appellant's UK branch provides a storage and distribution service to the Nissan and Renault dealerships in England, Scotland, Wales and Northern Ireland. The company also services Renault in Eire.
15. In late 1990/early 1991 Nissan decided to take legal action to remove a then incumbent independent distributor. The removal of the independent distributor led to the creation of the National Sales Company, located in Rickmansworth, and of the National Distribution and Logistics Centre. In considering suitable locations for the proposed Nissan distribution warehouse in the early 1990s regard was had to a centre of gravity study relating to the potential business value demographics, which in turn had regard to the anticipated dealer network. This showed that approximately 62% of Nissan's deliveries were southern bound. In addition, the business required a relatively large number of employees possessing appropriate skills in a short period of time. Having regard to these broad requirements Nissan decided to acquire a 200,000 sq ft warehouse and identified the golden triangle as a potential location. In addition to Magna Park, Rugby and Coventry, which provide good catchment areas for recruiting a skilled workforce, and the West Midlands, which has good communications and strong historical connections with the automotive industry, were considered as possible locations.
16. Whilst conducting the search Nissan became aware of the availability of a 250,000 sq ft warehouse on phase 1 of Magna Park. This comprised the original building erected on plot 1300. It was occupied by Volvo Trucks (UK) as its bus and truck division and had been erected for Volvo on a design and build basis some 18 months before it was placed on the market. The appellant moved into the appeal property in July/August 1991 and operations commenced there on 1 January 1992, prior to the expiry of the arrangement with the independent distributor. In the early 1990s, following the removal of the independent distributor, the successful launch of the National Sales Company and the improved service levels generated by the distribution and logistics centre at Magna Park, Nissan had significant plans for expansion, believing that they could secure 10% of the market and have over 400 dealerships. For this reason, and in order to prevent anybody else acquiring and building on it, they purchased the adjacent plot 1200. Plot 1200 remained undeveloped until the extension was built in 2001. By the mid to late 1990s Nissan's financial situation had deteriorated greatly, to the extent that the company was on the brink of insolvency. In effect, Renault rescued the company in the late 1990s, when Nissan was £20 billion in debt. Renault acquired a 44% controlling share in Nissan, which enabled the latter to continue operating as a global automotive company. Since November 1999, under the guidance of a new chief executive officer from Renault, Nissan has become the most profitable automotive company in the world in percentage terms.
17. In late 1999/early 2000 conversations commenced at senior management level with a view to developing a plan in Europe for combined logistics centres that would store and distribute both Nissan and Renault parts and accessories. These discussions took place across Europe. In early 2000 it was decided that logistics in the UK would be a Nissan operation and that Renault's existing distribution warehouse in Swindon would be relocated to Magna Park. The new Renault warehouse was constructed under the supervision of Renault's building division, Siam, which was responsible for engineering and designing the extension. It took nine months to build and was completed in October 2001. The Renault owned warehouse is built in part on a strip of land to the rear of the original structure, which is owned by Nissan. Whilst the alliance exists Renault pay Nissan an annual rent for this strip of land. They also pay rent for a mezzanine floor containing Renault parts and an engine rack, both of which are located within the Nissan warehouse. Finally, Renault pay a monthly sum to Nissan for providing the service to the Renault dealer network.
18. The original building was entered in the compiled 2000 rating list at RV £1,365,000 with effect from 1 April 2000 and with a description of warehouse and premises. This was reduced by agreement between the VO and Fisher Hargreaves Proctor as agents for the appellant to RV £1,285,000. Following completion of the extension the assessment was increased by valuation officer notice dated 30 November 2001 to £2,225,000 RV. On 10 September 2002 Fisher Hargreaves Proctor made a proposal on behalf of the appellant to reduce the assessment. At the resultant appeal, the VT decided to reduce the assessment to RV £1,872,000.
19. The effective date is 1 April 2002 and the material day is 30 November 2001.

Issues

20. The parties identified the following issues to be determined by the Tribunal:

1. The correct £/m² to be applied to the main space of the appeal property, that is the warehouse from which the relativities for the other accommodation are derived.

2. The relativities applicable to the fitted out offices and the canopy areas.

3. Whether there should be a 15% or any allowance to reflect the lack of dock level loading facilities.

4. Where there should be an allowance to reflect the eaves height.

5. Whether there should be a 2½% or any allowance to reflect the dividing wall between the original building and the extension..

6. Whether the uplift should be 20% or 15% for the fitted out offices to reflect their location.

7. Whether the correct valuation of the canopies should be 12.5% or 25% of the main space rate.

21. Some of these issues are interrelated. In addition, it is clear that there is a further issue which underlies most if not all of these issues. That is whether the appeal property suited the operational requirements of the appellant.

Case for the appellant

22. Put simply, the appellant's case is that the appeal property suffers from a number of disabilities, of varying significance, and that these diminish its value to the appellant and to the market in general.
23. The most serious disability is the complete absence of dock level loading facilities. Mr Wilkinson explained that for many years people did not realise how much value distribution and logistics could add to a business. This changed considerably during the 1980s, as more and more companies came to understand how dependent they were upon the efficient handling and storage of stock, which is now commonly referred to as supply chain management. The ideal situation, certainly from a finance director's perspective, was to have an empty warehouse where goods from suppliers were received, checked, handled, packaged and then distributed immediately. For a variety of reasons this was never achieved, but nevertheless the ideal was strived for. A warehouse operation was purely an overhead. Unlike a retail outlet or a factory, it did not provide a business with the opportunity to enhance its turnover. It therefore needed to be rigorously tested to see whether any further savings could be made. Against that background, distributors required buildings with loading facilities which assisted with the efficient receipt and despatch of stock. It was also essential for stock to be stored and retrieved as efficiently as possible inside the warehouse. The higher the volume of trade done by the business, the more critical it was for the loading facilities and the internal environment of the warehouse to be efficient. Whilst certain market sectors had low volumes of trade which did not necessitate quite the same level of efficiency, they were in the minority. Furthermore, they tended to have either relatively low space requirements or to occupy older buildings which would not otherwise be considered by modern, efficient distribution businesses. Mr Wilkinson said that it was extremely rare, both at the AVD and ever since, for modern distribution facilities to have no dock level loading points. The absence of dock level loaders was one of the greatest causes of inefficiency in the appellant's operation, and this problem had become worse over the years as the volumes handled by its business increased. When the appellant commenced operating from the original warehouse in the early 1990s it soon realised that it could not operate nearly as efficiently as it had thought it could with the level access loading doors. Consequently, it had commissioned the construction of mobile steel ramps which, to a large extent, were still in use today.
24. Mr Wilkinson explained that a typical trailer stands approximately 5 feet above ground level. The appellant uses mobile ramps for all its unloading operations. These are manoeuvred up to the rear of the trailer and then jacked up to the correct height by means of hydraulic pumps. Each ramp has a metal surface which is serrated to provide grip, so that fork lift trucks can then unload the trailer from the tail. The ramps are simply a way of making surface level loading work for the appellant's business. Without them it could not operate, because of its volume of trade and its desire continuously to increase its turnover. The ramps are, however, cumbersome and problematic. There are seven in total, costing approximately £11,000 each. When a ramp breaks, as often happens, operational delays result as it is necessary to double up on another ramp, which means rescheduling vehicles in a different way and at different times. It is not possible to unload more than one trailer with one ramp at a time and there are 25 trailers to be unloaded each day. In total the ramps cost between £5,000 and £10,000 per annum to maintain.
25. Although ramps are used for all unloading operations, the appellant mainly uses trailers with customised tail lifts for loading. The only trailers that are not loaded via tail lifts are the two that go to Eire each day and the thirteen double decker trailers. Mobile ramps are used to load both these sets of trailers. Between 45 and 50 trailers with tail lifts are loaded each day. The trailer requiring loading is connected to a power supply to activate the tail lift. Wheeled containers containing stock, known as roll cages, are rolled out of the warehouse and positioned under the canopy. The roll cages are then manually placed on to the trailer's tail lift three at a time. The tail lift is raised and the containers are manually pushed into the trailer. The wheels are then locked and the tail lift is lowered back down to the ground, for the operation to be repeated until the trailer is full. It takes around 45 minutes to load a conventional trailer in this manner, compared with 20 minutes for a similar trailer using a dock level loading point. Similarly, the time taken to load a double decker trailer by the ramp method is approximately 1 hour 15 minutes, compared with 30 minutes if done by a dock level loader. Pushing containers on to a trailer increases the risk of injury to staff, since containers can fall off tail lifts. Although the surfaces of the mobile ramps are of serrated metal, there are problems in winter for accessing by fork lift trucks, resulting in the need to de-ice the ramps.
26. Mr Wilkinson calculated that the appellant employed the equivalent of 5½ more members of staff than would be needed with a dock level loading operation. Dock level loading would therefore have produced a cost saving of £114,000 per annum as at the AVD. In addition, the ramps cost £5,000 to £10,000 to maintain and there is the opportunity cost of the approximately £77,000 needed to purchase the ramps. The inefficient loading arrangements mean increased overhead costs, because the operation needs to hold additional stock. Mr Wilkinson estimated conservatively that these overheads amounted to £37,500 per annum, plus the opportunity cost of holding additional stock to the value of over £250,000. Even after these additional costs have been borne, the building still does not allow the flexibility of use that was required for an efficient operation.
27. It was therefore, said Mr Williamson, easy to understand why, unless an operation required curtain wall loading, surface level loading was found only in the minority of distribution warehouses. Even in terms of the appellant's own business which, compared to food for example, did not have a high volume of turnover, the absence of dock level loading was a serious constraint. For food and volume retail operators, the appeal property would present insurmountable difficulties, given that the volume of their trade could be anywhere between three and ten times that of the appellant's. The insertion of more level access loading doors would not necessarily improve the efficiency of the appellant's operation, because for each door the use of mobile ramps meant that an area equivalent to five or six dock level loading points would be required to load and unload trailers.
28. Mr Hine said that in recent years, with the continuing requirement for warehouses to become more efficient, there had been a very significant emphasis on the provision of loading docks with dock levellers. This had proved to be the most effective method of loading and unloading the vast majority of goods, the principal exceptions being awkwardly shaped items, cans and drinks. He produced a schedule summarising the loading arrangements at a considerable number of large warehouses. Of these, only one had level access doors only and three others had a preponderance of level access doors over dock level points. Mr Hine said that the main method of unloading lorry trailers was from the side and through the tail of the trailer. He estimated that between 80 and 85% of goods were unloaded by tail end loading. The swiftest operation of this method was via loading docks with dock levellers, which enabled efficient warehouse operators to turn over the stock in their buildings completely up to 50 times in a year. The appellant turned over its stock around 12 times a year. Whilst this was very efficient for the particular industry sector, it was well down the efficiency league for the warehousing industry as a whole. As a result the poor design and loading of the building, whilst limiting efficiency, was something which the appellant could put up with, albeit at a cost. However, in the current market and that at the AVD there were very few companies which could operate, even with a reasonable degree of efficiency, in such a building. The complete absence of loading docks was a very significant drawback and would rule out around 90% of the market on this count alone. This was compounded by the fact that the building only had 11 level access doors, which made it the warehouse with the worst loading of its size and type in the locality.
29. If the appeal property were vacant and to let Mr Hine considered that significant expenditure would have to be incurred in improving its loading facilities, if that were physically possible. There were relatively few modern warehouses which did not meet the market's expectations. They tended to be sold rather than let, having been developed on a design and build basis, or let on lease containing an artificial rent review clause, to prevent the tenant's surveyor arguing for a rent reduction to reflect their abnormal characteristics. In terms of second-hand properties being returned to the market, Mr Hine said that the property owner would either mitigate any loading deficiencies as best he could prior to placing the property on the market, or be forced to make the necessary alterations at a later date as a result of the operation of market forces.
30. Mr Chapman had suggested at the VT hearing that a deduction of 15% should be made for the loading arrangements. He still believed that such a deduction was warranted. He considered it was supported by the end allowance of 14% which the VO had granted for structural problems to the floor of the Disney store at plot 4300, Harrier Park Way, Magna Park.
31. Although the appellant contends that the main inefficiencies in its operation result from the absence of dock level loading facilities, it also claims that the limited eaves height of the appeal property is a disability. Mr Wilkinson said that a taller building would enable his company to store relatively slow-moving products, such as parts for vehicles which are no longer manufactured. The ideal warehouse would have a clear internal height of 15 metres, as well as 36 dock level loaders and four level access doors.
32. Mr Hine said that the eaves heights of distribution warehouses had gradually increased over the years. This trend had resulted from the evolution of goods handling equipment, which meant that fork lift trucks were now able to work at higher levels on an economic basis. Warehouses developed and funded by pension funds and other institutional investors met the requirements of most potential occupiers. In the current market such buildings, with the floor area of the appeal property (approximately 40,000m²), would certainly have an eaves height of 15m and possibly more. At the AVD the "norm" would have been in the region of 13m. In Mr Hine's opinion the limited internal height of the appeal property would have been viewed by the market as a significant disadvantage for a building of its size, age and location. A similar building, but with a clear internal height of 15m, would have had a 50% greater cubic capacity. Increased cubic capacity was very important for warehouse operators, as it gave them more pallet locations, enabling them to store more goods. The higher space was not as valuable as that closer to ground level. Nevertheless, an operator would severely discount the rent he offered for a building with the eaves height of the appeal property. Rentalising the additional space at 20% of the base value meant that the cubic capacity lying between 10m and 15m above floor level would cost only 40% of the price of the same cubic space below 10m. That, together with the improvement in goods handling equipment, was the reason operators were keen to secure the extra height. Mr Hine said, however, that there was no specific formula for assessing the value of this additional cubic capacity.
33. The VO had valued distribution warehouses with an eaves height of 10m or less at £46 per m² and increased this by £1 for every metre in excess of 10m. Mr Chapman considered that this was an incorrect approach, since market expectations at the AVD were for a height of 13m. Although the VO had secured acceptance of this basis for warehouses at Magna Park and elsewhere, in the case of larger properties with RVs in excess of £1m the agreements predominantly related to buildings with an eaves height in excess of 12m. There had not been a widespread acceptance of the tone for large warehouses with an eaves height of 10m.
34. In arriving at his valuation, Mr Chapman assumed that in a building with 10m eaves height one could achieve racking of 6 pallets high, compared with 9 pallets in a 13m eaves building. He considered that there should be a rental differential of 11% between a 10m and 13m high warehouse. This represented 4% for each of the first two extra metres and 3% for the final metre and reflected his opinion that space became less valuable as the distance above ground level increased. Since the VO had increased the base value of £46 per m² by 3% to arrive at the value of a building 13m high, Mr Chapman deducted 8% from the base value in order to achieve a total discount of 11% from the VO's figure. He then added the agreed allowance for sprinklers to arrive at a basic rate of £43.60 per m².
35. In the course of cross-examination Mr Chapman confirmed that his opinion that the tone value should be reduced to reflect the extent of the eaves height below 13m only applied in the case of large warehouses. The dividing line in his view was at or about 30,000m².
36. The next disability for which the appellant seeks an allowance is the excessive area of canopies. Mr Wilkinson said that since March 2004 approximately 25% of the canopy area had been used for permanent storage, as a result of the phenomenal growth in the business, with the remainder of the canopy area being used for temporary storage of products awaiting handling or loading on to trailers. Items stored externally included bulky goods such as roof racks, which were unlikely to deteriorate when partly exposed to the elements. The space was used because it was there and because the height of the main building was restricted. It was, however, not possible to leave the majority of the appellant's products under the canopies for any length of time, as they would soon be damaged during winter weather conditions. There would be no need for the canopies if the building were provided with dock level loading. Moreover, the height of the canopies, combined with the sloping nature of the rear yard, meant that double decker trailers could not reverse more than 1m in length beneath the canopies.
37. Mr Hine said that canopies are not required with dock loading as the trailer is reversed into what is normally a sealed unit. The main purpose of providing canopies is so that the fork lift trucks can unload the lorries from the side whilst still being protected, in the main, from the elements. Consequently, the canopies are normally positioned only over the loading doors. In contrast to the many comparable warehouse premises adduced in evidence, the appeal property was unique in having level access doors on both sides, with the canopies running the full length of the building. As a result of the lower throughput of stock and the resultant reduced efficiency required from level access buildings, it was in general rare to see loading taking place from both sides. Mr Hine considered that canopies over level access doors were merely required to facilitate the proper use of the warehousing space. As such they did not add value to the building, although their absence would undoubtedly lead to a loss in value. In Mr Hine's experience, the only time a canopy attracted a rental value in a building such as the appeal property was when the property was procured on a design and build basis, so that the rent was a function of cost rather than value. He had never known a separate rental to be quoted for canopies in a building which was available on the second hand market.
38. In general canopies at Magna Park had been valued for rating purposes at 25% of the main space rate. Mr Chapman pointed out, however, that canopies in the area covered by the Valuation Office Agency's Wales and Western Specialist Rating Unit had been valued at between 12½% and 14%. Moreover, for the 2005 rating list the canopies at the appeal property had been valued at 15%. The area of the canopies at the appeal property was 21% higher than in any other warehouse in the locality. That was because a more efficient building could easily operate by loading to one side only under a single canopy. In order to reflect what he termed this superfluity of canopy space, Mr Chapman valued the canopies at 12½% of the main space rate. He produced calculations to show that, on the VO's basis, the appeal property was worth more than an otherwise identical building with exclusively dock loading, or indeed than a 13m high building with dock level loading. Since these buildings would be more efficient and attract greater demand, the VO's approach must be wrong.
39. Mr Chapman considered that the offices at the appeal property were poorly located, in that people approaching on foot had first to walk past the loading canopy and two active loading doors. In the majority of the other warehouses in the area the offices were located adjacent to the car parking areas in order to separate goods and pedestrian traffic. In order to reflect these poor access arrangements, Mr Chapman valued the offices at 15% above the base rate, compared with the established tone of 20%.
40. Mr Wilkinson said that another main cause of inefficiency at the property was the presence of the structural dividing wall between the Nissan and Renault warehouses. Although five doors had been inserted into this wall, it remained a physical barrier to an open plan operation. Its presence restricted certain internal traffic flows and limited volume movements, because of the need to avoid congestion "pinch points" at certain times. The dividing wall either prevented some of the processes which Mr Wilkinson would ideally have liked to flow between certain doors, or resulted in increased fork lift drive distances of up to 250m per journey as the result of the imposition of one-way systems. It also limited the amount of racking which could be installed, since an area adjacent to the wall had to be kept free to permit fork lift access from both ends.
41. Mr Wilkinson said that there were two main reasons why the wall still remained. Firstly, when the extension was constructed it was not known whether the Nissan/Renault alliance would be successful and both partners wished to ensure that it would be possible to separate the units quickly and easily should this prove necessary. Secondly, if it was physically possible to remove the wall, Mr Wilkinson believed that the cost of putting in the steelwork to support it would in all probability be prohibitive and the work would cause significant disruption to the existing operation. Mr Chapman accepted that Mr Reeds had made no deduction for dividing walls within his tone. He did not agree with that approach, however, because of the loss of racking space and other inefficiencies which were caused by the walls. He reflected these disabilities by making an end allowance of 2.5%.
42. There was one further difference between the valuations submitted by the two experts. That produced by Mr Chapman valued the gatehouse at the basic rate, whereas Mr Reeds's valuation adopted 110% of that rate. The difference was, however, immaterial in the context of the overall assessment and, in his rebuttal report, Mr Chapman accepted Mr Reeds's uplift.
43. Mr Chapman considered that, if the appeal property had been offered to let on the open market at the AVD, the demand for it would have been severely limited as a result of the poor loading arrangements. In addition, whilst he believed that demand and supply were broadly in balance at the AVD, by the material day warehouses were being built speculatively ahead of anticipated demand. Consequently, the limited number of potential tenants would have been able to choose from a selection of alternative premises, and this would have strengthened their position when negotiating a rent for the appeal property.

Valuation Officer's case

44. Mr Reeds said that, in his experience, the distribution warehouse market could be broadly divided into five sectors – parcel sortation and the distribution of food, general goods, vehicle parts and other specialist products. The various categories of distribution warehouse provided a range of facilities. The level of demand for and the rental value of a particular unit depended on how closely it matched the requirements of the sector for which it was designed or most suited. The appeal property was most suited to the automotive parts distribution sector. Its design had been shaped by the way the warehouse functioned and the systems the occupier employed. Mr Reeds did not consider that a warehouse which deviated from the perceived standard of a speculative developer or an institutional investor should receive an allowance on that count alone. Specialised hereditaments might have a more limited appeal to other occupiers by virtue of their specialisation. But they were ideally suited to those for whom they were designed. If the appeal property did not exist, the appellant would either have had to accept another specialised distribution depot or choose a warehouse of more standard specification. That would be unlike its existing property and consequently less ideal. The appeal property on the other hand suited the appellant well. If it were available the appellant might pay a higher rent for it as alterations would not be necessary. Moreover, the nature of the appeal property was such that it might attract interest from other occupiers, particularly those associated with general distribution such as BT, whose unit of 35,586m² at Hunters Boulevard, Magna Park had 24 level access doors and no dock level loading facilities. It might also appeal to occupiers who did not require a facility designed to meet high volume traffic movements and where the absence of dock levellers could be accommodated by the use of mobile ramps.
45. Mr Reeds explained that prior to the compilation date of the 2000 rating list there was very little rental evidence at this location. The appeal property had been valued by reference to a pattern of values derived from an analysis of rental evidence elsewhere. The warehouses at Magna Park had all been assessed by reference to a set of relativities and valuation criteria which, taken together, could be said to constitute a valuation scheme. This scheme was as follows:

Price applied to warehouse of eaves height 9 to 10 metres	£46 per m2
Height adjustment applied to warehouses of eaves height in excess of 10 metres	1% per m over 10m
Addition for water based sprinkler system	3%
Administrative offices	120% of adjusted main space price
Works offices	110% of adjusted main space price
Canopies/covered areas	25% of adjusted main space price
Outbuildings	60-80% of adjusted main space price
First floor storage	70-80% of adjusted main space price
Mezzanine/supported floors	20% of adjusted main space price
Addition for full air conditioning	10% of adjusted main space price

46. This scheme was supported by a large number of assessments of warehouses at Magna Park, which had been agreed with many leading firms of rating surveyors, and which had created a settled tone of the list. Although the settled assessments showed some minor inconsistencies, the impact of these on the agreed figures was negligible. Mr Reeds relied on this tone to support his valuation of the appeal property.
47. The appellant contended that the market expectation for a warehouse falling within a similar size band to the appeal property was for a greater eaves height than in the case of smaller properties. Mr Reeds, however, produced a schedule showing the average eaves height of the warehouses at Magna Park in the size range 30-50,000m², the average eaves height of all warehouses at Magna Park and the average height of warehouses below 30,000m². This schedule was subsequently amended to exclude buildings constructed after the AVD and the following average heights were agreed:

Warehouses 30-50,000m2	12.31m
Warehouses below 30,000m2	12.24m
All warehouses	12.26m

Mr Reeds concluded that market expectations in respect of eaves height did not vary significantly with size. Consequently, the adjusted price per m² applied to the appeal property, with an eaves height from 9.61m to 9.93m, should correspond to the figure of £47.38 per m² agreed in respect of the five other warehouses on Magna Park whose eaves heights ranged from 9.33m to 10.13m.

48. Mr Reeds did not agree that the area of canopies was much higher than would be required by the appellant or any hypothetical tenant. The warehouse had been extended to the appellant's specification shortly before the material day, so it must be what was required. The purpose of a canopy over ground level loading doors was to protect from the elements the goods being loaded into and offloaded from vehicles. Large canopies also enabled the space beneath to be used as buffer areas for goods awaiting transfer to lorry or warehouse and, in consequence, freed up space in the warehouse. If there was no canopy over level loading doors, in inclement weather side loading must be undertaken in the warehouse proper or, as in the case of plot 2200 occupied by Toyota, in a lobbied loading area within the main envelope of the warehouse. The ratio of gross internal area (excluding mezzanines and canopies) to canopy area was 5.27 at the appeal property. The comparable figures for the warehouses at Magna Park occupied by BT and Britvic were 6.60 and 7.55 and Land Rover occupied a unit in Birmingham where the ratio was only 3.34. The appeal property therefore did not stand out as having an excessive canopy area.
49. As for the appellant's suggested allowance of 15% for the inadequate loading facilities, again Mr Reeds disagreed. He found it difficult to accept that a warehousing facility designed to meet the occupier's requirements should be worth less to the hypothetical tenant, who would be the actual tenant or someone very similar. Mr Reeds considered that the absence of dock levellers reflected the sector of the market for which the appeal property was most suited. Not all operators required dock levellers. Some required none at all, others required a mix of dock levellers and level loading. On Magna Park there were two other properties, plot 4100 occupied by BT and plot 3400 occupied by Britvic, which had no dock levellers. The assessments of both had been agreed with no allowance to reflect that fact. Further evidence of the absence of such an allowance was provided by the agreed assessment of the appeal property prior to its extension.
50. Mr Reeds said that there were other companies, particularly in the automotive parts industry, occupying modern purpose built facilities without dock levellers. For example, J C Bamford Limited, manufacturers of motorised excavating equipment had a purpose built facility at Waterloo Park, Uttoxeter, Staffs, from where they distributed vehicle parts to the UK and abroad. This warehouse had eleven level access doors and two further doors to the side. Caterpillar Logistics (UK) Limited occupied a warehouse at Fradley in the West Midlands, from which vehicle components, mainly relating to diesel engines, were distributed to car service centres nationwide. The warehouse had eight level access doors and one dock leveller. It had been built with two dock levellers, but one was not required and had been bricked up to facilitate more efficient use of space within the warehouse. Mr Reeds said that the basis of the agreed assessments of these two warehouses was no different from that of those which had dock levellers and were otherwise entirely comparable. He accepted that there were more potential occupiers of warehouses equipped with dock levellers than without, but value was determined by the interaction of supply and demand and there was a far greater supply of warehouses with dock levellers. Mr Reeds was not aware that at Magna Park or in its immediate vicinity there was an oversupply of warehouses with level loading at the material date which could have given rise to a fall in value.
51. Nor did Mr Reeds agree that the distance of the offices from the car park or the pedestrian access route between the two constituted a disadvantage. No allowance had been considered appropriate when the assessment was agreed in the past and there had been no change in the arrangement as a consequence of the extension in 2001. The appellant handled valuable vehicle parts and required a higher level of security than was present at some other warehouses. This was achieved by separating the principal staff and visitor car park from the offices and the positioning of a turnstile adjacent to the gatehouse. A similar arrangement existed at plot 2400 occupied by Argos and at plot 5220 occupied by Unipart. In both cases the offices were assessed at 120 per cent of the main space rate. Mr Reeds accepted that the position of the pedestrian access at the appeal property might give rise to certain health and safety problems, but he did not think these would be considered significant in the mind of the hypothetical tenant. He felt that the advantages and disadvantages of the positioning of the offices would offset each other.
52. Mr Reeds pointed out that the appeal property was not the only one at Magna Park which had dividing walls. Such walls were usually provided to prevent the spread of fire. Plots 1100, 2200, 2400, 3100, 3320 and 5510 all had one or more dividing walls and their assessments displayed no allowance for this feature. He considered that the internal arrangement within the appeal property was well suited to the appellant's requirements. It enabled Renault and Nissan parts to be received, stored, sorted and dispatched in distinct and clearly defined areas of the warehouse. Other potential occupiers might have similar requirements and would not expect to obtain a discount in the rent because of the presence of the wall.

Conclusions

53. Much of Mr Reeds's valuation approach rests on the assumption that the appeal property, in its physical state at the material day, suited the appellant's requirements. The appellant contends that that assumption is wrong. I therefore start by considering the factual evidence given by Mr Wilkinson in respect of the acquisition of the original building and its subsequent enlargement. In his initial witness statement Mr Wilkinson explained that he had been involved in logistics and distribution for 25 years. He had previously worked for ICI and in 1991 he moved to Nissan, where he was employed to oversee the establishment of the initial operation at Magna Park. In 1996/97 he left Nissan to work as general manager, worldwide operations with Unipart Logistics. Following the creation of the global alliance of Nissan and Renault, he returned to Nissan to head up the logistics and distribution operation for Nissan Europe, with its subsidiary Nissan Motor Parts being created shortly afterwards.
54. The Volvo property on plot 1300 was not ideal for Nissan Motor Parts given the nature of Nissan's operation, which involved tailgate loading as compared with what Mr Wilkinson was sure would have been a side or curtain wall loading operation operated by Volvo. At the time, however, Nissan believed that its operation could cope with the loading arrangements that existed, although subsequently this proved not to be the case. Although Nissan's legal battle with its independent distributor did not affect its search criteria and the manner in which the company evaluated available warehouse premises, it had certainly created a significant sense of urgency which would not normally have been present in a search for such sizeable premises. Failure by Nissan to acquire new premises within a short period of time was not an option. Despite the absence of dock level loading the attraction of the Volvo property was its immediate availability. That it was being offered on a freehold or near freehold basis was also an attraction, given the Japanese preference for such tenure.
55. Nissan moved into the property in July/August 1991. Together with Mr Laurie Blackburn, Mr Wilkinson was responsible for setting up the business, which had to be fully operational by 1 January 1992 prior to the expiry of the notice to the independent distributor. Between July/August 1991 and 1 January 1992 Nissan had to establish a major operation at Magna Park. This involved setting up the entire administrative side of the business and the organisation of the warehouse itself. The latter necessitated designing the storage layout, obtaining quotes and subsequently commissioning contractors to supply and erect pallet racking. During this period Nissan also received 300 containers full of products, which required unpacking and storing so as to enable the business to operate. Consequently, the company was simply not in a position to commission premises on a design and build basis, or to await a more suitable alternative. The Volvo property was not ideal, but in the circumstances it was deemed to be adequate in terms of Nissan's overall objective.
56. Neither Mr Wilkinson nor Mr Blackburn had any involvement in the choice of the new building by Nissan in 1991. Everything concerning the acquisition of the property was dealt with by the parent company in Tokyo. In the light of his experience in the distribution and logistics business, Mr Wilkinson said that he would not have chosen the original building on plot 1300 as the site of the new operation. However, the company was in a very difficult position and in Mr Wilkinson's opinion the supply of vacant properties of a size comparable to the original Volvo warehouse was very limited. Nissan therefore acquired the property because of the absence of better specified alternatives and the extremely short deadline to which it was required to work.
57. Mr Wilkinson said that, in 2000, there were several reasons why it was decided that Renault's existing distribution warehouse would be relocated to Magna Park. Firstly, Renault's premises were too small to house the Nissan operation and there was insufficient spare land to accommodate an extension to the existing building. Secondly, a relocation of both businesses was impracticable, given the logistics of doing so. Thirdly, it was decided that a provision of the service by Nissan would be to both companies' advantage, in view of Nissan's better organisation and its management structure which had produced improved workflows and processes through a combination of the Japanese culture, a significant investment in staff training and the operation of the business in a non-unionised environment. Mr Wilkinson emphasised the importance of Renault's desire to make the absolute minimum investment in a facilities structure. This was a new venture for Renault and there was no guarantee that the global alliance would succeed. The French company's approach was to minimise its investment in order to secure an acceptable service, which under Mr Wilkinson's control would give them far greater efficiencies that they had previously experienced. It was for this reason that the building extension erected in 2001 mirrored the original structure and not because it provided optimum efficiency as a warehouse.
58. The Renault warehouse was constructed under the supervision of Renault's building division, Siam, which was responsible for engineering and designing the extension which was completed in October 2001. Mr Wilkinson said that, through Siam, Renault listened politely to what Nissan suggested, but they made entirely their own decisions on the construction of the extension, despite the fact that on completion the operation of the warehouse was to be handed over unconditionally to the appellant.
59. The extension took nine months to complete, but there were numerous differences compared with the original building, which reflected Renault's approach at the time. There was no fire/smoke ventilation system fitted to the roof, in contrast to the position in the original warehouse. This is because the fire authority said that such a system was desirable but not compulsory. Renault did not install a fire hose reel system because, although it was seen as best practice, it was not a legal requirement. These examples showed how Siam approached the extension: if it was not compulsory, Renault simply did not do it.
60. On 2 November 2005 Mr Reeds requested disclosure of various documents by the appellant and, in his rebuttal report dated 31 October 2005, he gave the following reasons for this request. Firstly, in order to test the claim that Nissan moved in haste to sub-optimal premises, he sought documentation providing information as to the search criteria adopted, the alternative sites which were available and/or investigated, the specification given to agents for identifying suitable new premises, the names of the agents employed to find an appropriate site and the content of the "centre of gravity study". Secondly, he requested all documents relating to internal discussions as to the inadequacy of the building and proposals to remedy those inadequacies, particularly in respect of loading arrangements. This information was required to ascertain why the appellant had occupied a sub-optimal building for more than 10 years without carrying out works to overcome what were claimed to be the major inherent disadvantages of the loading arrangements. Mr Reeds considered that it was relevant in this context that Nissan at Sunderland, according to the WMRC European Automotive Productivity Index, was the most productive in Europe every year between 1996 and 2003 inclusive. Nissan was also the biggest car manufacturer in the UK, producing about 20% of the total output in 2004. Thirdly, Mr Reeds requested disclosure of documents surrounding the acquisition of the property from Volvo in 1991. He said that it was unlikely that Nissan would have taken legal action against its distributor until suitable alternative premises were in place, otherwise they would have been unable to serve their showrooms and service centres. Fourthly, Mr Reeds asked for documents relating to Nissan's decision-making process in Japan. This was because Mr Wilkinson had given evidence on the rationale for their decisions, but neither he nor Mr Blackburn had had any say in the choice of the new building. Finally, Mr Reeds pointed to the absence of documentary evidence to show that, when they commissioned the construction of a mirror image of the existing Nissan warehouse in 2001, Renault decided to choose a sub-optimal configuration. He therefore sought disclosure of documents by Renault relating to its decision to incur the absolute minimum investment, the cost-benefit analysis that was undertaken and the design brief provided to Renault's building division.
61. With only one exception to which I refer in the next paragraph, none of the documentary evidence requested by Mr Reeds was provided by the appellant. Mr Wilkinson was not personally involved in Nissan's decision to move to Magna Park in 1991, or in Renault's decision to extend the original building by constructing a mirror image of it ten years later. In view of that, and in the absence of any corroboration, I have come to the conclusion that Mr Wilkinson's evidence to the effect that Nissan decided to move to an unsuitable building in 1991 and that Renault decided to move to an unsuitable building ten years later, is unreliable. It is the latter decision which is of particular significance in the context of the current appeal. So far as the extended building is concerned, Mr Wilkinson's evidence was predicated on there being cost savings from the surface level loading arrangement compared with dock levellers. Despite Mr Reeds's request for disclosure, Mr Wilkinson did not ask Renault for information concerning their decision-making process in 2000/2001, which might have explained why they had vacated their existing distribution warehouse with dock loading facilities in favour of a building with surface loading only. Mr Wilkinson is not an expert on building costs. The only expert evidence on such costs was provided by Mr Heeley. In his rebuttal report, Mr Heeley said that if the extension had been constructed with a total of ten doors in place of the existing five, with seven of the new doors in an area where the external road level was lowered to provide raised dock loading with buffers and three of the new doors as level loading with a canopy over the latter, there would have been a net cost saving of approximately £430,000 compared with the actual position. In oral evidence he said that it would have been possible to insert a total of 30 doors in the rear elevation and there would still have been a cost saving of some £320,000. This evidence was unshaken in cross-examination and I accept it. It follows that Renault installed surface loading doors together with canopies along the full length of the rear wall in 2001, when it would have been significantly cheaper to install dock level loading with a limited area of canopies. I therefore reject Mr Williamson's suggestion that, whether considered at 30 November 2001, the material day, or 1 April 1998, the AVD, the existing loading and canopy arrangement constituted a disability so far as the appellant's operation was concerned.
62. I have not overlooked the fact that, in the course of 2004, Mr Wilkinson started preparing a ten year plan with the object of catering for future growth projections. As part of this plan, he commissioned a report on warehouse development strategy from Logistics Development UK Limited. Their report, dated 27 April 2005, referred to "the desirability of loading docks". Mr Wilkinson agreed, however, that it was not until mid 2004 that his company concluded that the intensity with which the mobile ramps were being used in conjunction with the surface loading doors had become unsustainable.
63. The established tone for distribution warehouses at Magna Park – most of which were constructed on a design and build basis to meet the purchaser's requirements – does not distinguish between buildings with different loading arrangements. Unusual bespoke buildings have been valued on the same basis as buildings which conform to the requirements of institutional investors and to the majority of potential occupiers. In the course of cross-examination Mr Hine agreed that it was not necessary to adjust the tone merely because a building had been designed to meet the requirements of a particular occupier. It follows that a reduction below the tone value is only justified if the building does not meet the needs and requirements of its occupier. Since I have found that the appeal property did meet the appellant's requirements, no deduction falls to be made to reflect its loading or canopy arrangements.
64. Mr Chapman also sought a reduction of 8% below the established tone to reflect the fact that, at about 10m, the appeal property's eaves height was some 3m below that expected by the market. Neither he nor Mr Hine proposed any such adjustment when they gave evidence before the VT. Before me, Mr Chapman accepted that no deduction would be justified in the case of a warehouse with a significantly lower footprint. He considered, however, that in buildings over 30,000m², the limited height represented a more serious drawback. I do not accept that view. The argument that additional height produces valuable additional storage capacity applies to a building with a small footprint just as much as to a building in excess of 30,000m². A number of buildings with an eaves height in the region of 10m, ranging from 10,000m² to 22,000m², have all been agreed at £46 per m². In effect Mr Chapman is seeking a quantity allowance above 30,000m², with no evidence to support it. There is, however, substantial evidence of the occupiers of 9 to 11m high warehouses accepting a valuation which is only 2 or 3% lower than for a building with 13m eaves height. If the deduction suggested by Mr Chapman were correct, these buildings would have been entitled to a very much higher discount.
65. As I pointed out during the course of Mr Reeds's evidence, the majority of the warehouses at Magna Park have an eaves height significantly higher than the 9 to 10m which has been adopted as the standard for the purpose of setting the tone in the 2000 rating list, and apparently in the 2005 list as well. The greater the number of adjustments which have to be made, the less reliable the valuation. The number of adjustments required to reflect the heights of individual warehouses at Magna Park compared to the base height would be significantly reduced if the tone were founded on a building with an eaves height of 12 or 13m. The existing tone has clearly been established for the purposes of the 2000 rating list, but consideration might perhaps be given to whether a different approach would be appropriate in the future.
66. Two further disabilities were put forward by the appellant as justifying a disability allowance – the presence of the main dividing wall and the access to the offices. The assessments of other warehouses at Magna Park have been agreed without any allowance for dividing walls. In my view this aspect of the tone has also been established and there is no justification for an exception to be made in the case of the appeal property. As for the offices, I accept Mr Reeds's opinion that, in valuation terms, the limited safety concerns resulting from the need for pedestrian visitors to pass two loading doors is offset by the security benefits which result from the overall access arrangements.
67. In answer to a question from me Mr Chapman said that, if the Tribunal found that the loading facilities did not constitute a disadvantage to the appellant, the supply of and demand for warehouses in the area would not be relevant to the issues. There is therefore no need for me to draw conclusions from the evidence relating to supply and demand at the AVD and at the material day.
68. I therefore conclude that the value of the appeal property on the statutory basis was £2,080,000. The appeal is dismissed. Since there is no cross-appeal I confirm the assessment of the appeal property in the 2000 rating list at £1,872,000. The parties are now invited to make representations as to costs, and a letter relating to that accompanies this decision, which will take effect when but not until the question of costs has been determined.

Dated 23 January 2006

N J Rose FRICS


 


Appendix 1

Plot 1300, Hunter Boulevard, Magna Park,

Watling Street, Lutterworth, Leicestershire, LE17 4XN

Valuation by Mr A J Chapman, MRICS, IRRV

Description	Area	Rate Per m2	Value	Notes
Original Part
Ground Floor
Warehouse	22,384.00	43.6	975942.4	Tone of £46/m2 less 8% plus 3%
Loading Canopy	3,271.20	5.45	17828.04	12.50%
Plant Room	140.2	32.7	4584.54	75%
Administration Offices	1,319.60	50.14	66164.744	15% uplift
First Floor
Administration Offices	587.8	50.14	29472.292	15% uplift
Unfitted Out Part	731.8	34.88	25525.184	80% to reflect shell finish
Ancillary
Concrete Mezzanine Floor	2,085.20	8.72	18182.944	20% of main rate
New Mezzanine	1,270.10	8.72	11075.272	20% of main rate
Gatehouse	25.60	43.6	1116.16	As basic rate
Extended Part
Ground Floor
Warehouse	15,284.50	43.6	666404.2	Tone of £46/m2 less 8% plus 3%
Loading Canopy	4,412.30	5.45	24047.035
Ancillary
FF Mezzanine	1,408.90	8.72	12285.608	20% of main rate
SF Mezzanine	1,970.10	8.72	17179.272	20% of main rate
Total GIA (excluding mezzanines & canopies)	40,473.50
Sub Total 1			1869807.7
Less 17.5% (15% for loading and 2.5% for dividing wall)			327216.35
Sub Total 2			1542591.3
Plus Plant & Machinery			2241
		Total	1544832
Say Rateable Value £1.545 million	Say Rateable Value £1.545 million	Say Rateable Value £1.545 million	Say Rateable Value £1.545 million	Say Rateable Value £1.545 million

Appendix 2

Plot 1300, Hunter Boulevard, Magna Park,

Watling Street, Lutterworth, Leicestershire, LE17 4XN

Valuation by Mr P J Reeds, MRICS

Floor	Description	Area(m2)	£/m2	Value (£)	Remarks
Original Part
Ground	Warehouse	22384.0	47.38	1060554	Basic Rate £46 + 3% Sprinklers
	Loading Area/Canopy	3271.2	11.85	38747	Adjusted rate £47.38@25%
	Plant Room	140.2	35.54	4982	Adjusted rate £47.38@75%
	Offices	1319.6	56.86	75027	Adjusted rate £47.38@120%
	Gatehouse	25.6	52.12	1334	Adjusted rate £47.38@110%
Mezzanine	Storage (Concrete Floor)	2085.2	9.48	19759	Adjusted rate £47.38@20%
	Storage	1270.9	9.48	12043	Adjusted rate £47.38@20%
First	Offices	587.8	56.86	33420	Adjusted rate £47.38@120%
	Offices (Not Fitted Out)	731.8	37.90	27738	Adjusted rate £47.38@80%
Extension (2001)
Ground	Warehouse	15284.4	47.38	724175	Basic Rate £46+3% Sprinklers
	Loading Area/Canopy	4412.3	11.85	52264	Adjusted rate £47.38@25%
Mezzanine	Level 1 Storage	1408.9	9.48	13351	Adjusted rate £47.38@20%
Mezzanine	Level 2 Storage	1970.1	9.48	18669	Adjusted rate £47.38@20%
	Sub total	40473.4		2082063
	Plant and Machinery			2241
	TOTAL			2084304
	Say			2080000
Decision of Leicestershire Valuation Tribunal		-10%
	Rateable Value			£1,872,000

Valuation in accordance with Local Government Finance Act 1988 (as amended).

Notes

69. The values in terms of £/m² shown as applied to the ancillary items have been rounded, for presentational purposes, to the nearest penny. However, the total value has been calculated by multiplying the Area (m²) by the precise arithmetic figure derived from taking the appropriate percentage of the adjusted basic price.
70. The area of 40,473.4m² shown under the heading Area (m²) is net of canopies and mezzanines.