ITZA – What does it mean?
If you have ever received a report from a Surveyor on a High Street retail unit, it is likely you will have seen the phrase ITZA. This is an abbreviated term meaning In Terms of Zone A, which is a tool Surveyors use to compare rental value throughout retail units of differing configurations.
Originally the principle was created as a tool for rating valuation, however it is now recognised as a standard used throughout all valuation exercises for High Street retail units. The overarching principle is that the area of the shop closest to the frontage is the most valuable, with the value decreasing the further back from the frontage the area is. These are set out in Zones, each of which measures 6.1 metres (20 feet) deep. This is the industry standard in all of England apart from London, where 9.14 metres deep per Zone is used (30 feet). All of these measurements are set against the principles of Net Internal Area.
Zone A is the first 6.1 metres back from the frontage and this area is applied at full rate, Zone B is the second 6.1 metres of depth, of which this would be measured at a half rate. This continues on this formula of halving back the space through to Zone D (Zone C is divided by 4 with Zone D divided by 8), before Zone R is used, with the R representing Remainder. Zone R is commonly divided by either 10, 15 or 20 depending on the layout of the property. For example, a storeroom at ground floor may attract a Zone R of divided by 10, where a basement with a low ceiling height may attract a Zone R of divided by 20.
Zoning a property is not always as straightforward as splitting the property into 6.1 metres lateral zones. The principal of how the value is attributed must be kept in mind and areas which are concealed from the frontage or have stepped access may need to have an adjusted Zone applied, regardless of where they are within the shop.
Once these zones are totaled, an area expressed ‘In Terms of Zone A’ is provided, which is a figure that can be compared with other shops of different configuration. A quick example below is set out:
Example 2:
As can be seen from the two examples above, both have exactly the same Net Internal Area, however as example 2 is a wider, shallower unit, each zone is larger producing a higher total ITZA figure. Essentially, this would be seen as more valuable as more of the shop is visible from the frontage.
If Vickery Holman can assist with any of your property needs with Retail Properties, or any other asset class, please do not hesitate to contact us directly.
