Even as the overall economy was headed down last year, businesses in Koreatown were bracing for something different. They expected their boom to get even bigger.After all, the U.S. government last year waived visa requirements for South Korean tourists, which was supposed to boost the number of visitors from 200,000 a year to 300,000.
And before that, the South Korean government had loosened restrictions on foreign investment, and that started a stream of money flowing from Seoul to Los Angeles.
But the boom has been a dud. The stronger dollar and persisting fears of the swine flu are throttling tourism. In fact, the number of visitors is down, not up. And the economic downturn, worse than expected, has pinched the flow of South Korean money to Los Angeles.
Koreatown is the largest Korean community outside of Korea and any visitor there can see the effect. Restaurants that serve Korean barbecue are advertising half-off lunch specials and all-you-can eat buffets, while businesses that cater to tourists are reporting falling revenue.
But the most dramatic sign of a slowdown in the 7-square-mile area west of downtown is an epidemic of shuttered storefronts.
“It’s a fact that many stores have not been able to wade through the recession and have closed their doors,” said Myoung Won-Sik, chairman of the Korean American Chamber of Commerce of Los Angeles. “Losses are mounting and many are simply closing their doors for business because there are no buyers for their stores.”
One broker said vacancy rates for Koreatown commercial real estate increased by as much as 12 percent from the same time last year, and asking rents have dropped by 10 percent to as much as 25 percent.
“You can pick any center and you will see that the businesses that were marginal have now been replaced with for-lease signs,” said Mark Hong, who has specialized in the area for 20 years as a broker for CB Richard Ellis. “And it’s not just coffee shops. It’s a broad range of business from restaurants to service-oriented business such as travel agencies and hair salons.”
Braced for boom
Koreatown appeared to be going through a renaissance of sorts just two years ago, when more than $1 billion was being spent to redevelop the area, including the $165 million Solair Wilshire mixed-use development that includes 186 condos and 40,000 square feet of retail space.
