Avison Young predicts tougher logistics property market from 2023
AVISON YOUNG has unveiled research that it says lays bare the scale of changes to the property sector since 2017, and outlines how it is likely to change in two years.
Avison Young is forecasting that the 2023 revaluation of business rates will deliver the long-awaited rebalancing of the tax base to the benefit of traditional retail, but at a cost for the logistics and industrial sector.
The retail sector, which was comfortably the most dominant sector in the 2017 revaluation at £21.5bn, is now forecast to drop to third, having dropped in value by 26% to £15.9bn, saving the sector £8.5bn over three years. Logistics and industrial takes the top spot, having increased its total rateable value pool from £14.6bn to close to £17.9bn. Offices remain broadly static moving from £15.5bn to just over £16bn.
For the first time since 2005, London’s share of the rating pool will not increase at the 2023 revaluation. Avison Young forecasts that London’s share will remain broadly constant at 31%, the same percentage share as in the current 2017 revaluation. The strongest performing logistics sector is not dominant in the capital and this has therefore somewhat curtailed London’s historically unparalleled growth.
The growth in logistics has undoubtedly been a key driver for the regions, says Alison Young.
Key findings from the report include:
– The industrial/logistics rateable value pool in England & Wales could rise by as much as £3.3 billion in the new rating list. This would result in the rates liability for the sector increasing by £1.86 billion in 2023/24, up 25% from the previous year.
– Retail will see dramatic falls in rateable values, with rateable values predicted to fall by 26% between the 2017 and 2023 rating lists, equating to a loss in rateable value of over £5.6 billion.
David Jones, principal and managing director, business rates, Avison Young, said: “The 2023 rating revaluation will result in a significant rebalancing of the tax take, mirroring the state of the economy.
“What is clear is that the 2023 rating revaluation cannot come fast enough for the traditional retail sector.”
