Computer centres
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This section gives guidance on the approach to this class. For specific valuation guidance see the current practice note.
List description: CO1, computer centre and premises
Scat code:
068 (Non Purpose Built Computer Centres) and
069 (Purpose Built Computer Centres)
Scat: Suffix S.
The valuation and referencing of this class is the responsibility of the Industrial, Commercial and Crown team, National Valuation Unit.
The Industrial Specialist Class Co-ordination team and the Industrial Valuation Panel have responsibility for this class ensuring effective co-ordination across the business units. The team are responsible for the approach to and accuracy and consistency of Computer Centre valuations. The team will deliver practice notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating list. 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
It may be useful to refer to the computer centre case of Leda Properties v Howells, especially when valuing a vacated computer/data centre site.
The basis of measurement for this class is Gross Internal Area (GIA). Reference should be made to the Code of Measuring Practice for Rating Purposes in England and Wales.
Rating surveys should be captured on the Rating Support Application (RSA). Plans and surveys should be stored in appropriate folder within the Electronic Document Records Management (EDRM) system.
1st generation Computer / Data Centres occupy a variety of property types. Some sites have the appearance of office type buildings, others are more industrial in appearance. The modern trend (from late 2000’s onwards) has been to acquire a Distribution Warehouse (without the usual number of loading doors) and then significantly adapt internally through fit out.
Modern computer/data centre occupiers often want to plan for future growth and expansion. Consequently, many properties include significant internal fallow areas awaiting fit out. New sites also tend to phase occupation in, sometimes over a number of years as they relocate to a purpose built facility from existing older locations.
All of these properties will have significant plant and machinery (both rateable and non-rateable) with the modern distribution warehouse type facilities likely to have well secured data halls within the shell building, as well as an additional floor which will usually be a tenants improvement.
Given the diversity in age/construction over time, it is not possible to adopt a single basis of valuation appropriate to the class as a whole. Careful consideration of the physical characteristics of each property is required in order to determine the most appropriate valuation approach.
Older/1st generation computer/data centres should be valued in line with their previous list approach. These are likely to be adapted warehouses or offices, capable of an alternative use within rebus. The preferred method here will be a rentals approach based on the local tone appropriate to the alternative use.
Modern Computer / Data Centres are most likely to be significantly adapted distribution warehouses. The preferred method here is a “rentals plus” approach. In all areas other than the South East, the approach should be to uplift the prevailing distribution warehouse tone for the locality on the fully fitted data halls. In the higher value South East areas, the approach should be to add an additional sum per square metre to the Distribution Warehouse tone for the locality on the fully fitted Data Halls. The appropriate additions for this purpose (and the approach to be taken for air conditioning, car parking and additional land) are specified in the Computer Centres Practice Note for the Rating List in question.
Fallow areas (areas within the hereditament designed for future use / expansion) should be valued at £0 until such time as they are fitted out. The fit out should reflect the standard required to meet the demand for accommodation within this type of hereditament in the locality.
In addition, rateable plant and machinery will be valued on the Contractors Basis with costs being derived from the Valuation Office Cost Guide. Reference should also be made to the plant and machinery guidance found in Rating Manual Section 6: Part 5. The addition for rateable plant and machinery is likely to be significant, particularly in the modern adapted Distribution Warehouse type hereditaments
- Rating Support Application (RSA)
- Survaid
- Industrial, Commercial and Crown team, National Valuation Unit
- Class Co-ordination team (CCT)
- Industrial Specialist Rentals Class Co-ordination team (CCT)
1. Market appraisal
1.1 1st generation computer/data centres occupy a variety of property types. Some sites have the appearance of office type buildings, others are more industrial in appearance. The modern trend (from late 2000’s onwards) has been to acquire a warehouse/light industrial type building and then significantly adapt internally through fit out.
1.2 Modern computer/data centre occupiers often want to plan for future growth and expansion. Consequently, many properties include significant internal fallow areas awaiting fit out.
1.3 All of these properties will have significant plant and machinery (both rateable and non-rateable).
1.4 Industry reports indicate that computer/data centres are increasingly looking to use their space more efficiently for example more servers per rack.
1.5 There are currently over 300 computer/data centres in the 2017 Rating List. This figure is in line with the number in the 2010 Rating List, which indicates the market for computer/data centres remains strong.
1.6 The impact of the COVID pandemic on industrial property values was marked by considerable variation between sectors. In the computer centre industry, media comment around the Antecedent Valuation Date (AVD) focused on how the pandemic had strengthened the importance of computer/data centres given the shift to online services.
2 Changes from the last practice note
The treatment of fallow areas has been revised to ensure uniformity across the country.
3 Ratepayer discussions
There have been no discussions with ratepayers.
4 Valuation scheme
4.1 Given the diversity in age/construction over time, it is not possible to adopt a single basis of valuation appropriate to the class as a whole. Careful consideration of the physical characteristics of each property is required in order to determine the most appropriate valuation approach.
4.2 Older/1st generation computer/data centres should be valued in line with their previous list approach. These are likely to be adapted warehouses or offices, capable of an alternative use within rebus. The preferred method here will be a rentals approach based on the local tone appropriate to the alternative use.
4.3 Modern computer/data centres are most likely to be significantly adapted warehouse/light industrial type properties. The preferred method here is a “rentals plus” approach. In all areas, the approach should include an uplift on the prevailing distribution warehouse tone for the locality on the fully fitted data halls and other high specification areas within each property.
4.4 Fallow areas (areas within the hereditament designed for future use/expansion) should be valued at £0 until such time as they are fitted out. The fit out should reflect the standard required to meet the demand for accommodation within this type of hereditament in the locality.
4.5 As above, it is not possible to adopt a single basis of valuation appropriate to the class as a whole. Accordingly, for each property, the 2017 List valuation approach in respect of air conditioning, car parking and additional land should be adopted for the 2023 List.
4.6 In addition, rateable plant and machinery will be valued on the Contractors Basis with costs being derived from the Valuation Office Cost Guide. Reference should also be made to the plant and machinery guidance found in Rating Manual: section 6 part 5. The addition for rateable plant and machinery is likely to be significant, particularly in the modern adapted warehouse/light industrial type hereditaments.
1. Market appraisal
1st generation Computer / data centres still exist, but once they become vacant they tend to remain unoccupied and are not readily adaptable for other uses. Some sites have the appearance of office type buildings, others more industrial in appearance. The modern trend (from late 2000’s onwards) has been to acquire a Distribution Warehouse (without the usual number of loading doors) and then significantly adapt internally through fit out.
Modern Data Centre occupiers (within these adapted Distribution Warehouse buildings)also seem to want to plan for future growth and expansion, with (often significant) internal fallow areas awaiting fit out. New sites also tend to phase occupation in, sometimes over a number of years as they relocate to a purpose built facility from two or possibly three existing older locations.
All will have significant plant (both rateable and non rateable) with the modern Distribution Warehouse type facilities likely to have well secured data halls within the shell building, and often displaying an additional floor which will usually be a tenants improvement.
There are currently over 300 Computer Centres in the Rating List.
2. Changes from the last practice note
There was no 2010 list practice note for this class of property.
3. Ratepayer discussions
There have been no discussions with ratepayers.
4 . Valuation scheme
Given the diversity now in age / construction over time, it is not possible to adopt a single basis of valuation appropriate to the class as a whole. Careful consideration of the physical characteristics of the property is required in order to determine the most appropriate valuation approach.
Older / 1st generation Computer Centres should be valued in line with their previous List approach. These are likely to be adapted warehouses or offices, capable of an alternative use within rebus. The preferred method here will be a rentals approach based on the local tone appropriate to the alternative use.
Modern Computer Centres are most likely to be the significantly adapted Distribution warehouses. The preferred method here is a “rentals plus” approach. In all areas other than the South East, the approach should be +50% on the prevailing Distribution Warehouse tone for the locality on the fully fitted Data Halls. In the higher value South East areas, the approach should be to add a total of £20/sqm to the Distribution Warehouse tone for the locality on the fully fitted Data Halls. This mirrors the approach taken in the 2010 List.
Fallow areas (areas within the hereditament designed for future use / expansion) should be valued appropriately reflecting the standard of completion, fit out and demand for such accommodation with this type of hereditament.
The 2010 List approach in respect of air conditioning, car parking and additional land should be adopted for the 2017 List.
Rateable Plant and Machinery should be valued in accordance with the Rating Cost Guide. The addition for P/M is likely to be significant, particularly in the modern adapted Distribution warehouse type hereditaments.