How Much Does It Cost to Rent a Warehouse in the UK for Drinks Storage?

The cost of renting a warehouse in the UK has seen a massive increase in recent years. Multiple factors are contributing to this increase, including high demand for storage space, limited availability and rising operational costs.

London continues to be the most expensive market for warehousing, with occupier costs reaching £44 per square foot in June 2024, marking a 7.1% increase from the previous year. Additionally, Colliers reports that rents for large distribution warehouses across the UK have risen by an average of 5% year-on-year (colliers.com, 2024).

How Are Rising Warehouse Costs Impacting the UK Drinks Industry?

For UK drinks producers, the increasing costs of warehousing has had a significant impact, often leading to increased prices for consumers.

Many drinks businesses are finding it more challenging to manage overheads as warehouse rental prices continue to rise. Producers are now more than ever seeking alternative drinks storage solutions or adjusting their logistics strategies to remain profitable.

What Is The Average Cost of Renting a Warehouse in the UK?

When setting a budget for warehouse rental, drinks producers should consider the following average annual costs, based on warehouse size and location:​

1. Large Distribution Warehouses (100,000+ sq ft):

  • Total Annual Cost: Around £1.1 million.​

2. Mid-Size Warehouses:

  • ‍Average Rent: Approximately £14.50 per square foot per year- ​News | FI Real Estate Management
  • Total Annual Cost: For a 50,000 sq ft warehouse, this equates to about £725,000 annually.​

3. Small Warehouses:

  • ‍Average Rent: Ranges between £5 to £9 per square foot per year, depending on location and amenities- ​Clarus WMS
  • Total Annual Cost: For a 10,000 sq ft warehouse, costs can range from £50,000 to £90,000 annually.​

It's important to note that these figures represent base rental costs. Additional expenses such as utilities, insurance, maintenance and security can increase overall expenditure. Prime locations, especially in London and the South East, may charge higher rent due to demand and proximity to key drinks hotspots. Drinks producers should thoroughly research and consider all associated costs of renting a warehouse.​

What's Included in Warehouse Renting Costs?

When renting a warehouse for drinks storage in the UK, the costs typically include:

  1. Rent or Lease Payments: This is the main cost, which will vary depending on the warehouse's location and size.
  2. Utilities: Electricity, water and building heating/cooling for cold drinks storage.
  3. Insurance: This usually covers both the warehouse and the stored drinks stock.
  4. Maintenance: Cleaning, repairs and general upkeep of the premises.
  5. Security: CCTV, security alarms and staff to safeguard inventory.
  6. Taxes and Service Charges: Any additional costs set out by landlords or the local authorities

Pros of Renting a Warehouse for Drinks Storage

There are several advantages to renting a warehouse for drinks storage:

  1. Flexibility: Easily adjust space according to your individual business needs.
  2. Less Financial Commitment compared to purchasing a facility.
  3. Prime Locations: Closer access to key areas such as London and the South East, often at a cheaper price
  4. Scalability: Ability to expand or downsize as needed.
  5. Control: Complete ownership of drinks storage, logistics and operations.

Cons of Renting a Warehouse for Drinks Storage

However, there are drawbacks to renting a warehouse:

  1. High Costs: Particularly in major cities and prime drinking locations such as London.
  2. No Control Over Rent Increases: Leases are subject to inflation and market shifts.
  3. Long-Term Commitments: Contracts may be fixed and long-term, making them difficult to exit early if needed.
  4. Additional Expenses: Service charges, maintenance, and staffing add to overall costs.
  5. Responsibility of Logistics and Operations: When renting your own warehouse for drinks storage, you have to additionally organise the logistics and operations of your drinks deliveries. An alternative to this is partnering with a third-party logistics company (3PL), that offer storage, full Customer Service and drinks order and fulfilment to on-trade and e-commerce (DTC) customers.

How To Reduce Warehouse Costs for Drinks Storage

To offset the increasing costs of warehouse rental, drinks producers can explore the following options:

  1. Outsource to a Third-Party Logistics (3PL) Provider – Partnering with a 3PL gives access to warehouse facilities, cold storage, trained staff, customer service, and logistics support. Check out our blog on 10 Signs it Might Be Time to Use a 3PL for Your Drinks Business.
  2. Relocate to More Affordable Areas – Warehouses outside of London and the South East tend to be significantly cheaper. However, this does mean your warehouse is further away from key locations such as London and Brighton, making drinks delivery more expensive and next-day venue delivery more challenging.
  3. Implement Efficient Inventory Management – Using inventory management methods and software to reduce storage space needs by only storing the stock you know you truly need.
  4. Use Shared Warehousing – Collaborating with other businesses to split storage costs.
  5. Invest in Automation – Reduce labour costs through different methods of automation, such as automated order processing and reporting.
  6. Explore Government Grants or Subsidies – Some areas offer incentives to businesses setting up operations.

By considering these alternatives, drinks producers can navigate rising costs and optimise their storage strategies for long-term business sustainability.

Can a 3PL Reduce Warehouse Costs?

A third-party logistics provider (3PL) can absolutely help reduce warehouse-related costs. Here’s how:

  • ‍All-Inclusive Costs: A 3PL combines warehouse space, staffing and technology into one streamlined fee, making budgeting easier and often more cost-effective.‍
  • Access to Expertise: You're not just paying for storage; you're gaining access to a team of logistics professionals with strong systems and processes.‍
  • Staffing Savings: No need to recruit, train or manage warehouse staff- your 3PL will handle it all.‍
  • Scalable Solutions: As your business grows or goes through seasonal peaks, 3PLs can adapt their services to match demand without the need for additional investment.‍
  • Delivery & Distribution: Many 3PLs manage final-mile delivery and have established carrier relationships, reducing shipping costs and transit times.‍
  • Consolidated Deliveries: Drinks-focused 3PLs can consolidate orders from multiple drinks producers, allowing more of your stock to be delivered more regularly. This not only increases delivery frequency and reduces costs, but it's better for the planet, too! Read more about the benefits of consolidated drinks deliveries here.‍
  • Reduced Resource Investment: Outsourcing eliminates the need to invest in warehousing facilities and software, forklifts and a delivery van fleet.‍
  • Focus on Growth: With logistics taken care of, your team can spend more time on sales, marketing and scaling your brand to help increase sales and overall profit.

Tap'in: Transparent 3PL Pricing You Can Trust

At Tap’in, we believe in clarity and simplicity. That’s why we offer a straightforward and transparent Price per Deliverable Litre (PDL) pricing model that is scaleable and tailored to each business's individual drinks logistics needs.

Our PDL rate covers:

  1. Receipt and handling of pallets in to the warehouse
  2. Storage (based on your individual needs)
  3. Collection of empty kegs from venues
  4. Access to our expert Logistics & Warehouse teams
  5. Access to our full-time customer service team

Check out our PDL tool to find out how much you can save with Tap'in.

Is Tap'in the Right 3PL for Your Drinks Business?

At Tap'in, we specialise in drinks logistics only- this ensures our team stays laser-focused on providing a seamless service to breweries, wineries, distilleries and low-and-no drinks producers.

Tap'in 3PL could work for your drinks business if...:

  • ‍You're a drinks producer: Tap'in works with breweries, wineries, distilleries and low-and-no alcohol drinks producers. We use a simple PDL charging matrix that is specifically built to optimise drinks' delivery charges. ‍
  • You deliver a minimum 3,500 litres of drink per month: for our drinks logistics service to be cost-effective and efficient, we work specifically with drinks producers operating on these minimum quantities‍
  • You produce in the UK and are looking for London and South-East deliveries: our warehouse located just outside of London means that our team can deliver into London 4 times a week and even offer next-day deliveries (subject to our delivery timetable)

Get in touch with our expert team using the form below to find out more.

Alternatively, check out these blogs to find out more about outsourcing your drinks logistics:

  1. Do you know your true drinks delivery costs? In-house cost calculator
  2. How Can a Drinks 3PL Help You Deliver Across the UK?
  3. 3PL vs. Wholesaler- Which is Right For Your Drinks Business?

You’re one step away from finding the operations team of your dreams.
Get in touch today.

Fill in the form below or e-mail us on sales@tapin3pl.com