ML Guide to Zoning, Zone A and ITZA

'Zoning' is a valuation method for enabling shops of different sizes and layouts to be compared with one another.

Each zone is (usually) 20' (6.1m) depth, the first zone known as Zone A, the next Zone B, the next Zone C and so on. Mostly, zoning ends at Zone D or E, with any other zones the 'remainder'.

[I say 'usually' because, although 20' (6.1m) depth is common, 30' (9.14m) depth is used in some places; also, for many years, until the 2005 Revaluation when the valuation approach was standardized, zoning for Rateable Value in some locations was Zone A 15' (4.57m), Zone B 25' (7.62m) and Zone C 20' (6.1m)]

Zone A, which is at the front of a shop, is considered the most valuable, because the frontage or external width of a shop is an important feature. The zones that are less valuable are related to Zone A, generally by halving-back from Zone A so, for example, Zone B is A/2, Zone C, A/4, Zone D A/8. Even so, depending upon other valuation factors, the fraction can be A/3, A/5, A/6, etc.

Zoning provides a common denominator for valuation purposes. For example, assuming shop X is 18' (5.49m) wide by 55' (16.76m) depth and its rent £25,000 a year, what is the rent of shop Y whose width is 16'6" (5.03m) and depth 67' (20.42m).

[From now on, to avoid visual 'clutter', I shall use imperial areas only. Shop valuers still use imperial (feet and inches and sqft) rather than metric (cm and m and sqm)]

For shop X, multiplying 18' * 55' = 990 sqft, then dividing into £25,000 = £25.25 sqft

Shop Y's area is 1105.5 sqft so, on an overall basis, its rent is £27,917. However, that doesn't allow for Shop Y being narrower and deeper than Shop X

To answer the question what is the rent of shop Y, first calculate the Zone A rent of Shop X, using the zoning method:

Shop X
Zone A ... 18' * 20' = 360 sqft
Zone B ... 18' * 20' = 360 sqft
Zone C ... 18' * 15' = 270 sqft
Total ..................... 990 sqft

Next, I express all zones in terms of Zone A ("ITZA")

Namely:
Zone A ... 360/1 = 360
Zone B ... 360/2 = 180
Zone C ... 270/4 = 67.5
ITZA ................. 607.50 sqft

Then divide the rent £25,000 by ITZA = Zone A £41.15

To calculate the rent of Shop Y, I can either use two long ways, or the shorter ITZA way.

The long way is:
Zone A ... 330/1 = 330 * £41.15 ..... = £13,580
Zone B ... 330/2 = 165 * £41.15 ..... = £6,790
Zone C ... 330/4 = 82.5 * £41.15 .... = £3,395
Zone D ... 115.5/8 = 14.44 * £41.15 ..= £ 594
Total Rent .......................................................... = £24,358

Alternatively, another long way:
Zone A .... 330 * £41.15 ............... = £13,580
Zone B .... 330 * £41.15/2 ............. = £6,790
Zone C .... 330 * £41.15/4 ............. = £3,395
Zone D .... 115.5 * £41.15/8 .......... = £594

Total Rent .......................................................... = £24,358

Or the ITZA way
Zone A .... 330/1 ..... = 330
Zone B .... 330/2 ..... = 165
Zone C .... 330/4 ..... = 82.50
Zone D ....115.5/8 ... = 14.44

ITZA ..................... = 591.94

Multiply 591.94 * £41.15 Total Rent ...................... = £24,358

(Any slight differences are in rounding up)

In conclusion, compared with smaller Shop X, the overall rent for larger Shop Y is £27,917 but, because Shop Y is narrower and deeper, its rent is £3556 lower.

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Generally, a lower rent is attributed to space that is not on the ground floor. Sometimes, space is valued overall, other times as a fraction of Zone A, for example A/10 for basement, or first floor sales, A/15 for storage, A/12 for kitchen, A/20 for remote ancillary, etc. External space in outbuildings and garages is generally valued overall, but upper floors used as offices (not self-contained) would be a fraction of Zone A.

In measuring a shop, the preference generally is the net internal area (NIA). However, GIA (gross internal area) can be used for large space premises, such as stores and supermarkets, retail warehouses and factory outlets. (GEA) gross external area is also used, for building insurance valuation. Measurement is to structural walls, usually ignoring de-mountable or non-structural partitions. Also, for NIA, space taken by nibs, piers, columns and chimney breasts is excluded.

Changes or variations in floor levels can mean part of a zone is valued differently to the other part(s). Similarly, masking, where the line of sight or view from the frontage is interrupted structurally, such as a L-shape.

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Please note that negotiations for rent review or lease renewal are rarely straightforward. Although arithmetically and perhaps logically, applying a stated Zone A rent to your situation would, assuming valuation areas are agreed, indicate the likely rent, valuation is not an exact science.

Rent devaluations are often a matter of opinion, even between the surveyors involved with the actual transaction and, when the evidence is used by other surveyors in other matters, it is not uncommon for a different slant to be applied in order to manipulate the figures.