Real estate deal signals Koreatown’s rebound
Koreatown’s charms have caught on with Jay Yeun, who moved there more than a year ago.
“You have everything here,” Yeun said. The 30-year-old Seoul native had lived in Fullerton for 10 years before moving to City Heights, the area’s largest apartment complex. Now, most of his friends live nearby, and he frequents a 24-hour diner on Wilshire Boulevard for late-night tofu. Plus, he said, “in Koreatown, you don’t have to speak English.”
Executives at Kennedy Wilson Inc. are similarly charmed. The Beverly Hills real estate company on Thursday paid $120 million to Essex Property Trust Inc. for the 687-unit City Heights complex at West 3rd Street and South Westmoreland Avenue, and it plans to spend $11 million upgrading the 39-year-old former corporate housing development.
“There’s a whole evidence of expansion there: more nightlife, more commerce, more vibrancy,” said Bob Hart, president and chief executive of Kennedy Wilson Multifamily Management Group. “You’re really in the center of Los Angeles.”
After the 1992 riots, Koreatown and much of central L.A. went through a slump. Property values plummeted, crime was on the rise and commerce was slim.
But the area is rebounding, helped by expansion of the Metro Red Line, which has made Koreatown more accessible and spurred developments above subway stations on Wilshire Boulevard. Meanwhile, young L.A. residents priced out of areas such as the Westside and Hollywood are looking for hip alternatives.
Language is one reason Koreans have traditionally moved to the ethnic enclave. But Edward Koo, president of the Korean Real Estate Brokers Assn. of Southern California, said other cultural and economic factors had contributed to Koreatown’s growing prospects.
One is South Korea’s favorable exchange rate, which brings immigrants and capital to the U.S. Another draw is a stable return on Koreatown real estate investments, which Koo estimated at 6%. “There’s a lesson in Koreatown for every neighborhood in the city: to take your assets and liabilities and turn them into something successful,” said Dan Rosenfeld, principal at Urban Partners, a real estate planning company.
Still, the area’s rejuvenation has faced challenges, including disruption from construction projects, starting with the 1990s expansion of the Red Line.
Recently, increased crime and congestion have intensified debate about Koreatown’s boundaries, which are not delineated by the city but are traditionally marked east and west by Vermont and Western avenues and north and south by Beverly and Olympic boulevards.
Some in the community take pains to differentiate between Koreatown and more upscale neighborhoods in the area. By some standards, for example, City Heights sits in Wilshire Center, not Koreatown.
Hart said that Kennedy Wilson was attracted to City Heights because it fit the firm’s strategy of buying undervalued property, improving it and selling it within three to seven years. The company probably will hold on to the 8.2-acre property for longer, perhaps 10 years, and will profit from property appreciation and higher rents, he said.
Kennedy Wilson will renovate the apartments as residents move out, and rates will rise to $1,100 from $1,020 for the smallest studios, and to $2,000 from about $1,700 for the largest two-bedroom units, executives said.
The City Heights deal shows that the spectrum of players is broadening in Koreatown, said Roger Moliere, chief of real property management and development at the Metropolitan Transportation Authority.
MTA’s two projects along Wilshire Boulevard, on Vermont and Western avenues, involve partnerships with private developers, and they focus on drawing residents and commerce to subway stations and bus stops.
“There’s a cumulative effect when people start to see a market that’s theirs,” Moliere said. “That’s a signal that it has true, true strength, other than just ethnic value.”
