Case Study

Question 1

When was the valuation date?

Answer 1

Date of inspection, 7th January 2022

Question 2

Why did you adopt the RICS Valuation - Global Standards 2022, if this came into force in 2/02/2022?

Answer 2

Early adoption was allowed, so I decided to comply with the new Red Book

Question 3

What borough does the subject sits in?

Answer 3

Castle Point District

Question 4

What were the loading doors sizes?

Answer 4

3.5 W x 4 H

Question 5

Why do you think the subject is highly individual property?

Answer 5

Because I established that users/companies in that area are mainly SMEs manufacturers who require floor space between 5,000 to 15,000 sq.ft.

Therefore demand for larger space is lower

Additionally, a large size of amenity land which the subject provides may perhaps be seen as an unnecessary surplus which does not add significant value to the property.

Question 6

How did you determine whether the lease was inside or outside the Act?

Answer 6

I read the lease which stated that it was Contracted out of 1954 Act

Question 7

Why did you choose to select the units in Carnival Park and Pembroke Business Centre as you key comps?

Answer 7

Because I assessed the properties based
different parameters, such as location, condition, size and other facilities and established that on balance the two units could offer a similar level of rent

Question 8

Why didn’t you give more weight to Thamesview?

Answer 8

Mainly because this comparable had a much smaller floor space and therefore based on grounds of quantum, would be able to achieve achieve a significant higher rent than the subject

Question 9

How much did the vacant site sell for?

Answer 9

£166,000 (£77,000 per acre)

Question 10

Why didn’t you adopt the Investment method of Valuation instead of the Capital Value rate?

Answer 10

1. I felt I had quality vacant possession sales evidence for both uses which I was quite familiar with and comfortable in adjusting to reflect the differences with the subject
2. The client was very keen in testing the value in alternative way if possible and I also wanted do it a way I could avoid making an assumption for void periods.
3. For the purposes the actual report, I did value the property using an investment method and similar void assumption which actually reflected a lower price

Question 11

In you MVVP, why did you choose 1-3 Moss road and Unit 4, Airbone Close and not others that are arguably nearer?

Answer 11

1. I was aware that these weren’t perfect matches to my subject, however, I gave greater weight to these comparables as there some key similarities with the subject, I had full information of the physical and transactional details which therefore give me greater confidence in implementing various adjustments accurately to reflect the differences between properties.

Question 12

Why do you think Moss road which is in a arguably better location had a lower rate to the one you’ve adopted?

Answer 12

• With Moss Road there were many specification elements which matched with the subject and made it comparable, such as size, site coverage, similar industrial estate context, however, Moss has significant lower eaves height and consist of an older property. These two latter elements had great weight in determining an overall upward adjustment.

Question 13

Why did Airbone Close, which is older and worse property, had a higher figure than your subject?

Answer 13

• Yes, Airbone was a poorer building and lacked of private yard but the similar location and smaller size counter balanced the adjustments and generate a similar price.

Question 14

In your MVVP, why didn’t you apply a similar rate to Thamesview given that it was in a such a close proximity to your subject?

Answer 14

• Firstly Thameseview comaprable was under offer which meant that it would sit lower down the list of my hierarchy of evidence,
• Secondly, I would have applied a material discount on it based on ground of quantum

Question 15

When comparing the subject to comparables, how did you account for the trade counter area?

Answer 15

Any unit that did not have a counter area I would apply a discount on it, but the downward adjustment % would be different and assessed on a case-by-case basis based on the overall range of factors.

Question 16

Why do you adjust each comparable? what are you trying to achieve?

Answer 16

• I make adjustments on each comparable based on a range of factors. If the property has for example better qualities and therefore command a higher rate, than the subject, I would adjust the rate down wards viceversa if the I believe the property had poorer qualities.

The aim is achieve an accurate adjusted rate representing what the comparable would have sold if it had the same characteristics to my subject.

Question 17

All your rental comps are very different to your subject, how did you arrive at your opinion of rent?

Answer 17

• I am aware that the comaprables collated are varied and generally smaller in size but each of the properties listed had at least 2-3 key factors comparable to the subject and also I considered these the most reliable piece as I had obtained full information on them.
• Essentially, in this occasion ranked all the comparable using the hierarchy of evidence obtained an adjusted rate and then did a sort of weighted average

Question 18

Why did you choose Carnival Park as your best rental comp?

Answer 18

• Carnival park was strongest comparable because there were some key features which made it very similar to the subject, such as yard, type of construction, and trade counter area.
• I know many agents who operate in that area, so the information regarding the property came from a primary source which enable me to adjust the rate with more confidence.

Question 19

Why did you take so long to deliver the valuation, when it normally takes 2-3 weeks?

Answer 19

Yes, I am aware of the unsual timeline, but this was a sort of calculated delayed as I made my client aware before agreeing the ToE that I would only be able, due to a large workload, to carry out the valuation in January and report within 3 weeks. My client was happy with the proposed arrangement and confirmed the ToE.

Question 20

What were the business rates?

Answer 20

£95,000

Question 21

What class use is the unit?

Answer 21

• The permitted use under the lease is B1, B2 and B8.

Question 22

What class use is the unit? did the unit have permission for office and counter area?

Answer 22

• The permitted use under the lease is B1, B2 and B8 so covering for offices as well

Question 23

Does the lease allow any assignment?

Answer 23

he tenant can assign the whole of the demised premises but not part only and may sub-let the whole or permitted parts subject to landlord consent.

Question 24

Give me an overview of rents and cap.value rates across Essex for industrial?

Answer 24

Location /£psf Prime Rents Secondary Rents Prime Owner Occupier Capital Values
BASILDON £13.00 £11.50 £250
BRAINTREE £12.00 £10.50 £230
CHELMSFORD£14.00 £13.00 £275
THURROCK £16.00 £14.50 £340

Question 25

Have you check planning risk in Canvey Island?

Answer 25

• Surprisingly most of Canvey island area including the subject local area has low risk from river sea and surface water flooding, thanks to an historic drainage system regeneration and adoption of tidal mitigation measures that improved the whole area against flooding. A new revamp program is scheduled to take place soon.

Question 26

Why did you use the equivalent yield instead of split yiled?

Answer 26

• Given that larger weight that would be play the reversion period on the overall cap value of the investment and due to the detailed information that I had on rack rented investments, I felt more comfortable in finding the right yield for the reversion period and rather than coming up with an overall average equivalent yield that would perhaps rely on too many assumptions of voids MRs etc.

Question 27

Did you carry out a planning research? can you expand?

Answer 27

The subject and vacant site falls within an employment area with a presumption towards the development of industrial type of properties.
At the time of the instruction there was a new Local Plan being prepared, which was scheduled to be launch in due course.

Question 28

What is quantum?

Answer 28

It means amount.

The larger something is the less you pay. It’s about scalling and reflecting that in pricing.

Question 29

How do you adjust for dated transactions?

Answer 29

Treat with caution.
Speak with local agents
Look at Land Registry house price growth.

Question 30

Did you consider house price growth for the 2021 comps?

Answer 30

Yes, however during the window time adopted the values had remained stable

Question 31

Describe the property of you case study

Answer 31

• Industrial unit of 27,000 sqf
• Steel portal frame with insulated profiled steel cladding and roof
• Clear Internal eaves of 10mt
• Electrically operated loading doors
• 7% of ancillary office
• Trade counter area
• Parking space to the front and enclosed yard area to the back