Statler Hotel / Wilshire Grand (1952)

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KevinEP
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Statler Hotel / Wilshire Grand (1952)

Postby KevinEP » Fri Apr 03, 2009 6:24 am

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http://www.latimes.com/business/la-fi-d ... 5908.story


From the Los Angeles Times

South Korean firm unveils plans to put its stamp on L.A. skyline

Conglomerate Korean Air proposes building a pair of high-rises to replace the aging Wilshire Grand hotel. The project would cost $1 billion.

By Roger Vincent and Peter Pae

April 3, 2009

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.

roger.vincent@latimes.com

peter.pae@latimes.com

Steve Tepperman
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Korean Air Plans $1 Billion Project LA Downtown New

Postby Steve Tepperman » Fri Apr 03, 2009 9:08 am

Plan Calls for Razing Wilshire Grand Hotel, Building 40- and 60-Story Towers
by Anna Scott
Published: Thursday, April 2, 2009 11:59 PM PDT
DOWNTOWN LOS ANGELES — The Wilshire Grand, which for 57 years has stood at the corner of Seventh and Figueroa streets, will be torn down and replaced with a $1 billion luxury hotel, office and residential complex, officials with property owner Korean Air announced Thursday.

The 1.7 million-square-foot development would change the skyline of Downtown Los Angeles, rising less than a mile north of the Convention Center and L.A. Live, where a 1,001-room Ritz-Marriott hotel is scheduled to open in 2010.

Preliminary plans call for a 40-story tower housing approximately 700 four- or five-star hotel rooms and 100 residences, plus a 60-story office tower. The towers would rise on a full city block bounded by Figueroa, Francisco and Seventh Streets and Wilshire Boulevard.

The Downtown-based Thomas Properties Group will spearhead the design, development and leasing.

The project is expected to break ground by 2011. Construction would take up to three years. Financing is not in place yet, though Korean Air Chairman and CEO Y.H. Cho said last week that a couple of large Korean banks have expressed interest in the plan.

Thomas Properties Chairman and CEO Jim Thomas declined to say how much he might need to seek in construction financing because it is premature. But he expressed optimism that by the time the project receives all the necessary city approvals, which could take 18 months, the frozen credit markets will have loosened up.

“The country’s going to be in a world of hurt if, a year and a half from now, we haven’t fixed the credit markets,â€￾ said Thomas. “We have a high degree of confidence that the credit markets will be flowing by the time we’re ready to proceed.â€￾

If not, he said, the project could be built in multiple phases. Currently it is all anticipated to rise at once.

Jack Kyser, chief economist with the Los Angeles Economic Development Corp., agreed that the credit markets will likely be in better shape within a couple of years. Still, he said, the developer will have his work cut out for him.

“I think the hotel is going to be very positive,â€￾ Kyser said, but “people might question the office side of it.â€￾

No More Renovations

Korean Air, one of the largest global airlines, purchased the building that houses the 16-story, 900-room Wilshire Grand in 1989.

At the time, the hotel at 930 Wilshire Blvd. was a Hilton. It was later operated by the Omni Hotels chain before becoming the Wilshire Grand in 1999. Korean Air has made several upgrades to the property, most recently a $40 million renovation launched in 2005.

Cho said last Thursday that despite the improvements, the 1950s-era hotel is past its prime. “It is not economically feasible to keep renovating,â€￾ he said. “It’s time to redevelop the building.â€￾

Thomas Properties was selected to develop the property last May, after a competitive bidding process. Cho would not reveal how many companies vied for the job.

Though still in the early planning and design stage, preliminary renderings of the project by Downtown architecture firm AC Martin Partners depict two soaring, glass-enclosed towers adorned with ground-level greenery. An 18,000-square-foot landscaped park and plaza would be at the corner of Seventh and Figueroa streets, and the buildings would house ground-floor retail.

A below-grade parking structure would accommodate up to 1,700 spaces.

The towers would include environmentally friendly features, Thomas said, designed to meet the U.S. Green Building Council’s LEED certification standards.

Cho said he is negotiating with several four-star or higher hotel operators. Korean Air also owns three hotels in Korea and another in Hawaii, he said, “so we have a good knowledge and good access to many prestigious hotel management companies.â€￾

Thomas and Cho said they are highly optimistic about the hotel component, largely because of the property’s proximity to the upcoming Ritz-Marriott at L.A. Live, which has already provided a boost to Convention Center bookings in the coming years.

“I don’t worry about the competition,â€￾ said Cho. “More quality hotels attract more people to conventions, and a higher quality of conventions.â€￾

Bruce Baltin of PKF Consulting, which tracks the hotel industry, agrees.

“They should complement each other,â€￾ said Baltin, who has consulted on the Wilshire Grand project. “The better the overall hotel stock, the better it’s going to be for everybody. Convention planners love a concentration of good hotel rooms.â€￾

Baltin and Kyser both pointed to San Diego, which has a 1,600-room Hyatt, a 1,300-room Marriott and a 1,200-room Hilton near its convention center, as a model for Los Angeles

“The Wilshire Grand was a very old hotel,â€￾ Kyser added, “and it had small rooms. It started as a traveler’s hotel, so you didn’t have all the amenities you have now. We could use another big hotel Downtown.â€￾


Office Space


The office component of the development could be a riskier proposition.

According to Kyser, Downtown’s office vacancy rate stands at 13.8%, higher than the county average of 12.2% By comparison, office vacancy on the Westside is 11.1%

However, Kyser noted, the completion of the under-construction Gold Line extension and the Expo Line should provide the area with a boost. The Wilshire Grand site also stands across the street from the Seventh Street Metro station, which serves the Red and Blue lines.

“This gives Downtown the larger mass transit draw, which is important if you’re trying to develop your workforce at all levels,â€￾ said Kyser. On the office front, he continued, “There’s potential Downtown. It has a lot of amenities, and it has the best mass transit access.â€￾

Thomas, who has developed more than 5 million square feet of high-end Downtown office space, including the Wells Fargo Center, U.S. Bank Tower and the Gas Company Tower, said he expects to be able to pre-lease at least 50% of the office tower before construction begins, which should help entice lenders. By the time construction is finished, he said, he hopes to have up to 80% of the building leased.

“I’m absolutely convinced that Downtown Los Angeles is going to need a new office tower in the next three to five years,â€￾ said Thomas. “What we’re doing is extremely timely.â€￾

Contact Anna Scott at anna@downtownnews.com

page 1, 04/06/2009

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nichols
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Postby nichols » Tue Apr 07, 2009 5:32 pm

Should this become a ModCom issue?
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ChrisLAXEncounter
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Re: Statler Hotel / Wilshire Grand (1952)

Postby ChrisLAXEncounter » Wed Apr 08, 2009 2:07 pm

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.
. . .
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.

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.

. . .

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.

. . .

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."

[/quote]

Doesn't the article raise more questions that it answers, such as:

1. San Diego's hotels are located on the bay, so Santa Monica would be a better anology;

2. The Condo market in downtown LA is very soft.

3. What about the Rich err, RtizCarlton & Marriot going up next door to Staples & the Convention Center? Is there enough business to justify the expenditure?

4. Is Korean Air really strong enough financially to make that type of long-term (& risky) investment?

5. Is the hotel project viable without the construction of the office tower if Thomas can't get pre-leases for 50% of the space?

6. Are construction costs really down - I thought concrete costs have increased dramatically?

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Lynxwiler
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Postby Lynxwiler » Mon Apr 13, 2009 11:29 am

It's a great building, but there's little of its historical details left. Certainly no vintage interior features remain.


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