London prime industrial and logistics property rates expected to rise over 50 per cent

Occupiers of industrial and logistics properties will see significant rises in their business rates following the next revaluation in 2023, particularly for prime assets in London, the South East, and South West, according to latest forecasts by real estate specialist Colliers.

Colliers estimate that business rates bills in London for prime industrial and logistics space will increase on average by 50.2 per cent following the next revaluation, with the South West of England seeing rises of 32.5 per cent and the South East 30.6 per cent.

These rises mean a prime industrial or logistic unit in London, with a current rateable value (RV) of around £500k will find its rates bill rise from £266k a year to £399,630 a year, following the revaluation.

Putting this into perspective, Colliers estimates that Amazon’s biggest distribution centre in Tilbury which currently pays an annual rates bill of around £3.625m will see its annual bill rise to £4.745m following the revaluation, based on Colliers assumptions; a year on year increase of 30.9 per cent.

These rises are due to the sustained rental growth for industrial and logistical property between the last time the VOA revalued property for business rates in April 2017, when rates were based on market rental levels of April 1, 2015 and the current valuation which will be based on rental levels of April 1, 2021.

John Webber, head of business rates at Colliers, commented: “As a result of the significant rental growth witnessed across the industrial & logistic sector, Colliers is forecasting an average increase of 18.7 per cent on rates payable from April 2023.

“For those occupying a large number of properties in the sector, such as Amazon or even retailers such as Next or John Lewis, these rises will mount up, particularly for operators who have prime sites in London and the South East and those in the South West. This will have a significant impact on their overheads from 2023 onwards.”

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