Korea-based scope and 2026 review date
This calculator compares a Korean cold-storage lease with a build-and-own facility in KRW.
It uses editable proposal, contract, electricity-bill, logistics, failure, spoilage, and residual-value inputs rather than market averages.
The legal boundary was reviewed on August 15, 2026, but the result is not a permit, refrigeration-safety, tax, finance, food-safety, engineering, valuation, or contract decision.
Cold-storage rent versus build is more than monthly rent versus construction cost
A weak comparison places only monthly rent on the rental side and only shell construction cost on the ownership side.
A decision-ready comparison also needs the deposit, management and handling charges, land, professional services, refrigeration plant, electricity, retained labor, maintenance, failures, spoilage, transport distance, major repair, exit cost, and residual value.
The timing differs as well: rental usually preserves initial cash while ownership concentrates capital at the start and may recover land or facility value at the end.
This cold-storage rent vs build total cost calculator holds usable area, pallet positions, monthly kilograms, and pallet movements constant, then models ten and fifteen years at once.
It reports nominal TCO, discounted present value, annual and monthly equivalent cost, cost per kilogram and pallet move, the first cumulative crossover year, a modelled break-even volume, and three sensitivity groups.
Every preset is illustrative and must be replaced with the user’s current Korean proposals and operating records.
Like-for-like service
Match temperature scope, usable area, pallet positions, monthly kilograms, and pallet movements before comparing price.
Hidden operating costs
Separate electricity, utilities, labor, maintenance, downtime, spoilage, handling, and location transport.
Two decision horizons
Compare ten and fifteen years to reveal cases where low initial cash wins early but lower recurring cost wins later.
Three sensitivity groups
Move throughput, electricity price, and rent independently to 80%, 100%, and 120% of the base case.
Prepare inputs in a disciplined order
The most important step is scope reconciliation, not a sophisticated discount formula.
If a lease includes electricity or handling and the same amount is entered again, rental cost is double counted.
If a construction quote excludes refrigeration, docks, insulation, controls, or commissioning, ownership is understated.
Assemble the evidence first and reconcile each input against one source document.
- Compile twelve months of kilograms handled, pallet receipts and dispatches, average occupancy, and peak-season inventory
- Read the lease for deposit, base rent, management fees, power allocation, handling tariff, minimum billing, refund, and exit conditions
- Split the ownership proposal into land, acquisition and professional services, building and insulation work, refrigeration and controls, racks, WMS, backup power, and relocation
- Use metered or proposed annual kWh and a recent electricity bill to separate the effective usage price from additional demand or fixed charges
- Use failure, temperature excursion, claim, disposal, and dispatch records for downtime, spoilage, distance, and trip frequency
- Align VAT inclusion, terminal-value timing, and included service scope before reading the ten-year, fifteen-year, and sensitivity results
What the key inputs mean
Cold-storage total-cost input groups, evidence, and common omissions| Input group | Best evidence | Common omission |
|---|
| Area, pallets, volume | WMS records, stock snapshots, receiving and dispatch logs | Pallet positions are not the same as monthly pallet moves |
| Rental contract | Lease, management schedule, and handling tariff | Minimum billing, peak surcharge, and power inclusion |
| Build investment | Land contract, design and supervision scope, itemised trade quotes | Docks, floors, insulation, backup power, and commissioning |
| Energy and utilities | Recent bills, metering, refrigeration proposal, or energy audit | Usage price double counted with demand or fixed charges |
| Downtime and spoilage | Failure, temperature, claim, and disposal logs | Using revenue instead of unrecoverable value and contribution loss |
| Transport distance | Dispatch records and vehicle, driver, fuel, and toll settlement | One-way distance and empty return legs |
| Terminal value | Deposit clause, appraisal, used-equipment evidence, and disposal quote | Double counting land and building value |
Occupancy is not a cost discount
A 75% average occupancy rate does not mean the operator pays only 75% of rent or fixed staff cost.
The model leaves total cost unchanged and separately identifies the idle share of year-one fixed space, labor, utility, maintenance, and repair cost.
Peak inventory, buffer capacity, dock flow, and service-level requirements still need an operational capacity study.
How the annual cash-flow model works
Rental alternative
Initial cash includes the refundable deposit and non-refundable move, brokerage, rack, and integration cost.
Annual cost includes rent and management fees, handling per pallet move, electricity and other utilities, retained labor, transport, downtime, and spoilage.
The final year adds exit and reinstatement cost and subtracts only the contract-confirmed deposit refund.
Build-and-own alternative
Initial cash includes land, acquisition and professional services, building and insulation work, refrigeration and controls, and other setup.
Annual cost includes electricity, other utilities, labor, maintenance, repair reserve, handling, transport, downtime, and spoilage, plus major repair in the selected year.
The final year adds disposal or sale cost and subtracts separately entered land and facility residual values.
Present value, equivalent cost, and unit cost
PV TCO = initial cost + sum of annual net cost / (1 + discount rate)year
EAC = PV × r / [1 - (1 + r)-n]
PV cost per kg = PV TCO / discounted cumulative kilograms
At a zero discount rate, present value equals nominal cost and equivalent annual cost equals PV divided by the number of years.
Kilograms and pallet movements use the same discount factors as cost so the numerator and denominator share a consistent date basis.
NIST Handbook 135e2022 informs this lifecycle cash-flow structure, but its U.S. federal assumptions are not imported as Korean market or statutory rates.
A worked example where the horizon changes the answer
The default illustration uses 660 m², 500 pallet positions, 75% average occupancy, 300,000 kg per month, and 900 pallet moves per month.
Rental starts with KRW 230,000,000 of cash, including deposit, and KRW 23,000,000 of monthly rent plus management fee.
Build-and-own starts with KRW 4,280,000,000, including KRW 1,200,000,000 for land.
The model uses KRW 170 per kWh, 2% annual throughput growth, 2.5% electricity escalation, 2% general and rent escalation, and a 4% discount rate.
These figures are a deterministic illustration, not a Korean market benchmark.
Default illustrative ten-year and fifteen-year cold-storage rent versus build result| Metric | Rent | Build | Interpretation |
|---|
| Initial cash | KRW 230,000,000 | KRW 4,280,000,000 | Rental preserves initial liquidity |
| Year-one monthly operation | KRW 50,681,667 | KRW 27,095,000 | Ownership has lower recurring operation |
| 10-year PV TCO | KRW 5,607,100,939 | KRW 6,121,041,974 | Rent is lower by KRW 513,941,035 |
| 15-year PV TCO | KRW 8,111,020,754 | KRW 7,664,282,289 | Build is lower by KRW 446,738,465 |
| 15-year PV per kg | KRW 178.33/kg | KRW 168.51/kg | Build has lower long-run unit cost |
| First cumulative crossover | Year 15 | Year 15 | Terminal values contribute to the crossover |
| 15-year break-even volume | 192,292.32 kg/month | 192,292.32 kg/month | Modelled cost-equation crossover |
Read the result as a conditional decision
Rental is lower over ten years because the ownership investment has not yet been recovered.
At fifteen years, accumulated rent and handling charges plus the assumed land and facility residual values make build-and-own lower.
If residual values are optimistic or major repair is understated, the crossover can disappear.
If rent and management fees fall to 80% of the base case, the illustrative rental PV becomes KRW 7,413,604,395, below the build PV of KRW 7,664,282,289.
The contract-renewal condition and sensitivity table therefore matter more than the base-case winner alone.
The break-even volume and three sensitivity tests
The fifteen-year break-even monthly volume scales kilograms, pallet movements, and transport trips by one common factor while holding fixed cost and unit rates unchanged.
Because those variable costs are linear under the model, the calculator solves the crossing from the zero-volume and base-volume PV differences.
A negative solution, a flat difference, or a zero base volume produces no positive break-even output.
This is an economic crossing, not a capacity certificate.
It does not confirm that pallet positions, docks, refrigeration plant, labor, or transport can handle the stated kilograms.
The volume sensitivity changes monthly kilograms, pallet moves, and trips together; electricity sensitivity changes only the kWh unit price; rent sensitivity changes monthly rent and management fee together.
Reviewing all three reveals whether the apparent winner depends on a single fragile assumption.
- Use 80% throughput to represent slower demand or a delayed customer ramp
- Use 120% throughput only after confirming physical capacity and staffing
- Use the electricity range with both alternatives because metering and tariff exposure may differ
- Use the rent range to test renewal, management-fee, and comparable-site negotiations
- Re-run terminal values separately because they are often the largest long-horizon uncertainty
Three practical decision moments
Before lease renewal
Enter the current contract and each replacement proposal separately.
Isolate minimum volume, handling surcharge, electricity allocation, and deposit refund from headline rent.
Use the output to request a like-for-like revised proposal.
Before land and build quotes
Split every construction and refrigeration trade instead of hiding missing items inside zero.
Owned land may have an opportunity value even when no purchase cash leaves the business.
Reconcile the result against architect, contractor, and refrigeration-supplier scope sheets.
Before a growth commitment
Run conservative, base, and upside throughput assumptions.
Compare average occupancy with peak inventory and service-level buffer.
Keep economic break-even separate from engineering and logistics capacity.
Korean legal boundaries reviewed for 2026
The National Law Information OPEN API showed the Building Act as current under law ID 001823 and MST 273437, promulgated August 26, 2025, and effective February 27, 2026.
Article 11 addresses building permission, Article 14 addresses qualifying building reports, and Article 19 addresses change of use for an existing building.
A favorable build result does not establish zoning, development permission, farmland or forest conversion, building use, access, parking, structural, fire, electrical, or occupancy compliance.
The High-Pressure Gas Safety Control Act was current under law ID 001850 and MST 283919, effective March 10, 2026, with Article 4 covering the permit and reporting framework for high-pressure-gas manufacture.
Its Enforcement Decree was current under law ID 002246 and MST 286839, effective June 9, 2026.
Article 3 paragraph 1 item 4 includes a general refrigeration-capacity threshold of 20 tons and wording for 50 tons when non-flammable and non-toxic high-pressure gas is used as refrigerant for industrial or refrigeration and cold-storage use.
Refrigeration-capacity tons are not warehouse storage tons or monthly throughput tons.
Refrigerant classification, equipment capacity, storage and processing conditions, technical review, and permit or report status require qualified engineering, the Korea Gas Safety Corporation, and the competent authority.
- The calculator does not decide building permission, reporting, change of use, or occupancy approval
- It does not decide refrigeration-manufacture permission or reporting, refrigerant suitability, or gas, fire, electrical, structural, sanitation, or food-safety compliance
- It does not guarantee HACCP, pharmaceutical cold-chain, insurance, or customer-contract temperature compliance
- It does not calculate VAT recovery, acquisition or property tax, depreciation, corporate tax, grants, or financing
Ways to improve the estimate
Derive electricity from bills and metering
Separate incremental kWh price from demand and fixed-charge effects rather than dividing every bill component by kWh.
Challenge small spoilage assumptions
At 300 metric tons per month, a 0.1 percentage-point difference equals 300 kg every month.
Include return transport
Use round-trip distance and a per-kilometre amount that reconciles vehicle, driver, fuel, toll, and empty-return cost.
Stress terminal values
Enter land and facility value once, then test sale timing, disposal cost, obsolescence, and a conservative recovery case.
Place major repair in time
Use manufacturer and facility records to estimate when refrigeration, panel, floor, dock, or control renewal may occur.
Turn the output into a quote request
Mark the largest cost gaps and most sensitive inputs, then ask each lessor or supplier for the same revised scope.
Frequently asked questions
Does the calculator supply an average construction cost per pyeong?
No. Region, ground conditions, clear height, insulation, refrigerant, refrigeration capacity, docks, floor load, fire and electrical scope, and timing create too much variation. Enter itemised building and refrigeration proposals.
Should owned land be entered as zero?
A cash-only scenario can use zero purchase cash. If the land could be sold, leased, or used by another project, an economic comparison should also test its opportunity value rather than treating book cost and economic value as identical.
What if electricity is included in rent?
Set the separate rental kWh or utility input to zero and keep the amount in rent. If electricity is billed separately, remove it from rent and enter actual kWh and bill-based rates to avoid double counting.
Does volume above break-even make ownership automatically better?
No. The number is only the point where the two fifteen-year cost equations meet under current assumptions. It does not prove refrigeration, storage, docks, labor, transport, financing, or service capacity.
Does a 50-ton refrigeration threshold mean 50 tons of stored product?
No. The Korean decree uses a legal refrigeration-capacity concept, not stored product weight or monthly throughput. Refrigerant and equipment specifications require a separate professional and authority review.
Are loans and taxes included?
No. This is a pre-tax operating and investment TCO comparison. Connect debt service, VAT, acquisition and holding taxes, depreciation, corporate tax, and grants through separate accounting, tax, and finance advice.
Primary sources and update policy
The lifecycle cash-flow and present-value structure follows NIST Handbook 135e2022 as a method reference only.
The Korea Energy Agency energy-audit programme supports using measured facility data, and KEPCO terms and tariff tables confirm that contract type, demand, voltage, season, and time structure can matter.
No KEPCO tariff, Korean market rent, construction rate, energy intensity, failure rate, or residual value is hard-coded.
The legal source review used the National Law Information OPEN API on August 15, 2026, for Building Act ID 001823 and MST 273437, High-Pressure Gas Safety Control Act ID 001850 and MST 283919, and Enforcement Decree ID 002246 and MST 286839.
Rebuild the comparison with real evidence
Gather recent throughput, energy, failure, spoilage, and dispatch records, then reconcile lease and build scope in one table.
Save the ten-year, fifteen-year, and sensitivity results and ask the lessor, architect, contractor, and refrigeration supplier to price the missing items on a consistent basis.
The result is not a substitute for the decision; it is a disciplined way to identify the next facts the decision requires.