The aging Wilshire Grand hotel and adjoining offices in downtown Los Angeles would be demolished and replaced with a $1-billion hotel, office and retail complex under a plan by one of South Korea’s largest business conglomerates.
The proposal is unexpected at a time when builders are backing away from big projects, and when the market for office space and condominiums has softened considerably because of the recession.
At 1.8 million square feet, the project is also a testament to the rising clout of L.A.'s Korean community, the largest outside of Seoul.
“This will be an icon of the Korean community for Los Angeles,” said Yang Ho Cho, the chairman of Korean Air, which is developing the project.
Korean Air is the flagship company for Hanjin Group, which has $20 billion in annual revenue from its interests in land, sea and air transportation as well as construction, heavy industry, finance and information services.
Hanjin’s involvement raises the project to a new level, marking the first time that a South Korean developer has engaged in an endeavor of this magnitude. The move is particularly significant because the company is what South Koreans call a chaebol, one of the family-owned conglomerates that dominate the nation’s economy.
“This is on a bigger scale and it shows the growing clout” of Korean and Korean American investors, said Kyeyoung Park, associate professor of anthropology at UCLA’s Center for Korean Studies.
Plans for the project, announced Thursday, call for replacing the 1950s-era Wilshire Grand -- located at Figueroa Street and Wilshire Boulevard -- with a luxurious 40-story hotel with as many as 700 rooms and topped by several floors of condominiums.
Next door would be an even taller building, a sleek 60-story tower with 1.1 million square feet of rentable office space. At ground level would be shops, a landscaped park and a public plaza.
It would be the first major high-rise office building constructed in L.A. since 1992.
The airline has hired Thomas Properties Group, one of the city’s best-known developers, to oversee the project.
“It’s amazing that anybody has the capacity to engage in new construction right now,” said City Councilwoman Jan Perry, who is familiar with the proposal and supports it so far. “I’m looking forward to engaging in the process to move it forward.”
But for those familiar with Korean Air, the latest project is not surprising and is in keeping with its roots as a chaebol.
A high-end hotel fits well with the conglomerate’s operations in Los Angeles: It makes parts for airplanes, flies the planes here as the busiest Asian carrier at Los Angeles International Airport, runs travel agencies that book the tickets and operates a catering business that serves the food on the planes.
It already owns several hotels in South Korea, including the Hyatt Regency next to the Incheon airport, and drives guests there in its own buses.
The daughter of the chairman of the chaebol runs its hotel division.
Korean Air eked out an operating profit of just $18 million in the fourth quarter of last year but is believed to be in a strong enough financial position to back the hotel project.
Money began flowing from South Korea to Los Angeles in the 1970s but really picked up in the late 1990s, as South Koreans built shopping malls and other projects in Koreatown, helping fuel the growth of Korean banks.
The Wilshire Grand project -- on prime downtown land and outside of Koreatown -- kicks it up a notch, said UCLA’s Park.
Thomas Properties Chairman Jim Thomas, who has helped build downtown landmarks including the US Bank Tower, is currently working on a proposed $800-million, mixed-use project in Universal City that would house the new studio and West Coast headquarters of NBC Universal.
Before work can begin on Wilshire Grand, the project must win approval from the city of Los Angeles, a lengthy process. But Thomas said in an interview that if all went according to plan, construction could begin by 2011 and be complete by 2014.
The project is being proposed at a gloomy time for the commercial real estate market, when few buildings are being sold -- much less built. But Thomas said he believes that will turn around by the time the project is ready to go.
“Construction costs are going down,” Thomas said. “This is the best time to get started.”
Los Angeles architect David Martin, a principal at AC Martin Partners, is designing the project. Martin designed the Figueroa-at-Wilshire high-rise across the street from the Wilshire Grand in 1990 and more recently worked with Thomas building the environmentally friendly California Environmental Protection Agency headquarters in Sacramento.
His modernist design calls for the towers to be situated on the site at a north-south angle to take advantage of sunlight, and may include a photovoltaic skin to create solar power. Some windows would open to an exterior clad in glass and perhaps terra cotta.
The new hotel, located across the street from a subway station, would have fewer rooms than the 896-room Wilshire Grand but would be more luxurious, Thomas said. It would also have meeting and banquet facilities supported by parking for 1,700 cars.
The Wilshire Grand, built in 1952, was originally a Hotel Statler and later a Hilton. Once one of the city’s best hotels, it is now a mid-market inn catering to conventioneers and tour groups from overseas. The property is a few blocks north of Staples Center and has office wings that are 15 stories high.
Korean Air bought the hotel in 1989.
Hanjin’s connection to Los Angeles runs deep. The chairman, his brother, his sister and his three children all graduated from USC. The chairman, known as Y.H. to his American friends, is on the USC board of trustees.
At LAX, Korean Air is the busiest Asian carrier, with six departures a day, all of them operated on jumbo jets such as the Boeing 747 and 777 wide-body aircraft.
Next year, the airline expects to be the first Asian carrier to operate the Airbus A380, the world’s largest passenger jet, at LAX.
Despite a global downturn in air travel, Korean Air is one of the few foreign carriers that have been adding flights, particularly at LAX, as it has expanded its marketing to Chinese and American passengers flying to Asia.
In an interview with The Times this week, Cho, the Korean Air chairman, said the airline had anticipated the economic downturn and began building up its cash reserves more than a year ago.
“We expected some problems and we prepared by accumulating cash,” Cho said, adding that the airline also began expanding to emerging markets in Eastern Europe and Africa.
While the number of South Korean travelers fell 20% last year, overall passenger traffic increased, he said.
(BEGIN TEXT OF INFOBOX)
Replacing the Wilshire Grand
What: A 1.75-million- square-foot office, hotel, condominium and retail development located in two skyscrapers, one 60 stories and one 40 stories
Where: A 2.7-acre block at Wilshire Boulevard and Figueroa Street in downtown Los Angeles, site of the 1950s-era Wilshire Grand hotel and office complex
Who: The property is owned by Korean Air and would be developed by Thomas Properties Group
When: Construction is projected to begin in 2011, with completion in 2014
What: A subsidiary of shipping conglomerate Hanjin Group, the airline is the busiest Asian carrier at LAX
Background: The airline operates 124 aircraft and flies to 116 cities in 39 countries
When: Formed in 1969, it began flying two years later as a cargo carrier transporting wigs from Seoul to Los Angeles
Headquarters: Seoul, South Korea