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Photo by: Cory Barnes Korean Air |
First there were the Chinese house hunters. Now there are the Korean commercial developers.
Korean Air has unveiled plans to transform the Wilshire Grand Hotel in downtown Los Angeles into a $1 billion complex of two towers soaring into the skyline, with a footprint of nearly two million square feet housing hotels, businesses, retail and maybe even some condos.
That is a huge investment at a time when commercial real estate is faltering, and when California in particular seems like a bad place to build anything. "I think the best time to invest is the lowest time," says Korean Air CEO Y.H. Cho. "When nobody's doing it, investing is the best time."
Los Angeles is home to the largest Korean community outside Seoul, and Korean Air is the largest Asian carrier into LAX. The airline, a subsidiary of Hanjin, actually bought the Wilshire Grand 20 years ago, and has been running the aging facility all this time, patiently waiting for the right time to completely redevelop it.
The Koreans took over the property in the '80s at the same time the Japanese were in a buying frenzy, spending $300 billion to buy up everything from Rockefeller Center to Pebble Beach. It didn't go so well for them. Cho says his plans are different. As a graduate of USC (his children went there as well), he says, "I'm not a speculator in real estate." He says, "Our only interest is investing in Los Angeles for the long term to help our companies around Asia and our Korean community in LA."
The project now goes through the permitting process, which could take 12 to 18 months.
Financing is not completed yet, but builders hope that by the time the permit process ends, credit will have thawed, while labor and materials prices will still be low.
"We see a lot of capital sitting on the sidelines looking for investments," says builder Tom Ricci of Thomas Properties Group.
"We take as a very positive sign that we are turning a corner, that this project represents a little bit of the Phoenix rising from the ashes."
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