Powered by a new generation of Korean American entrepreneuers, L.A.’s Koreatown is expanding in almost all directions from its historic core near the intersection of Olympic Boulevard and Vermont Avenue.
Hundreds of Korean-owned restaurants, grocery stores, beauty salons and professional offices can be found in ever-larger numbers as far north as Hollywood and as far west as the Miracle Mile district defining a new Koreatown in the heart of Los Angeles.
More than 3,200 Korean-owned firms are located within a two-mile radius of the intersection of Wilshire Boulevard and Western Avenue including 332 on Santa Monica Boulevard, 150 on Beverly Boulevard and 219 on Wilshire itself, according to a survey by the University of Southern California, the first of its kind.
“Koreatown is moving north,” said Kay Kyung-Sook Song, assistant vice president of civic and community affairs at USC and an expert on L.A.’s Korean American community, who completed the survey. “Koreatown is probably much larger, much more heavily concentrated in the northwest than most people thought.”
In fact, according to Song, Koreatown’s traditional two-square-mile reach roughly Olympic Boulevard on the south, Vermont Avenue on the east, Wilton Avenue on the west and Third Street on the north no longer applies.
A more accurate picture of Koreatown, she said, would show the neighborhood bounded by Santa Monica Boulevard to the north, Hoover Boulevard to the east, Washington Boulevard to the south and La Brea Avenue to the west an area of about 12 square miles.
But it’s not just small business that is driving the growth of the new Koreatown. Just consider the Mid-Wilshire real estate market.
Quietly operating far from L.A.’s financial mainstream, Korean American investment groups have been purchasing real estate in that long-troubled marketplace. Since the end of 1989, such groups have snapped up 23 buildings in the area and now control 40 percent of Mid-Wilshire’s total office stock, according to Charles Dunn & Co. Inc., a commercial real estate brokerage in the area.
That compares to approximately 9 percent in 1989.
Landlords have been filling their buildings with a new generation of young Korean American professionals. Many are the sons and daughters of shopkeepers who are returning to Koreatown to launch their own medical practices, law offices, accounting firms and import-export businesses.
“The make-up has changed from the large corporate users of the past to more entrepreneurial users occupying anywhere from 1,000 to 3,000 square feet,” said Rosey Miller, senior vice president of the commercial real estate brokerage Grubb & Ellis Co. and a long-time observer of the Wilshire Boulevard office market. “The expansion of the Korean companies has been a very positive event for Mid-Wilshire.”
The transformation of Koreatown has implications far beyond Mid-Wilshire real estate. Recent growth and investment trends in Koreatown hint at the enhanced role immigrant entrepreneurs are poised to play in L.A.’s post-Cold War, post-recession economy, said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University.
“The movement away from retail to professional services is a reflection of the maturation of the Korean population,” Guerra said. “Given the events of 1992, that they would come back and invest so heavily in L.A. shows a real optimism in the region.”
Few Angelenos would have predicted such a sentiment five years ago, when the severe trauma of the L.A. riots sparked a wave of business closures and led thousands of Koreans to leave the area altogether.
During three days of rioting, some 2,300 Korean-owned businesses in South Central Los Angeles and Koreatown were burned, looted or both causing approximately $350 million in property damage, according to the Korean Times L.A., the oldest and largest of the region’s three Korean-language newspapers.
Half a decade later, however, “people have recovered from the L.A. riots,” said Andrew S. Ahn, the paper’s business editor. “They are starting to invest again.”
But many investors are steering clear of South Central Los Angeles, according to the Korean American Coalition, one of the community’s leading civic organizations. Koreans currently own 245 of the 570 liquor stores in the area a 20 percent drop from before the riots.
“There are still a large number of businesses in South Central, but their numbers are decreasing,” said Harrison Kim, executive director of the Korean American Chamber of Commerce.
Instead, former liquor store owners are going into other businesses such as restaurants, franchises or white-collar professions such as insurance or real estate. And with office and retail space on Olympic Boulevard both expensive and hard to find, such merchants are helping to push Koreatown’s borders north and west, Kim added.
Equally significant is a remarkable generational shift underway within L.A. County’s Korean American community of approximately 350,000.
Specifically, the first generation of Korean immigrant merchants, garment contractors, gardeners and dry-cleaners is giving way to a new generation of business-savvy urban professionals.
These are members of the so-called “1.5 generation” the term Korean Americans use to refer to the thousands of children born in Korea but raised and educated in the United States, who are not quite first generation, and not quite second.
The 1.5 generation, who are now entering their 30s and 40s, are responsible for much of Koreatown’s current dynamism particularly the investment activity along Wilshire Boulevard, said Stephan Haah, president of Harvest Asset Management Inc., a real estate advisory firm that specializes in Koreatown.
The 37-year-old Haah, who emigrated to California with his family at the age of 15, is good example of a “1.5-er” himself. After graduating from U.C. Berkeley, he worked for a large commercial brokerage for several years, before opening his own six-employee shop on Wilshire Boulevard.
“Young professionals who have been working in mainstream America are coming back to Koreatown,” said Haah. “They are bilingual and bicultural and they don’t need retail space on Olympic. They need office space.”
The number of Korean American professionals has surged over the past decade. The 1996-97 edition of the Korean Business Directory, published by the Korea Times, listed 285 attorneys, up from just 68 a decade ago an increase of more than 300 percent.
The directory itself doubled in size, from 450 pages to 924 pages over the same period.
This new Korean professional class is remaking the community’s financial picture, said William Im, president and chief executive of Wilshire State Bank, one of L.A.’s nine Korean American banks and an active player in financing Korean entrepreneurs in the area.
The bank’s business loan volume increased about 40 percent between 1996 and 1997, Im said.
And rather than lending to businesses typically associated with Korean Americans, a growing portion of the bank’s 1997 loans are financing manufacturers, wholesalers, franchises, real estate transactions and import-export ventures, Im said.
“The face of Koreatown is changing,” said Charles Kim, executive director of the Korean American Coalition, one of the community’s leading civic organizations. “Eventually, I see commercial Koreatown extending all the way along Wilshire Boulevard” from Vermont on the east to as far west as La Brea, he said.
Such expansion likely would have been beyond the wildest dreams of Hee Deok Lee, the Korean immigrant credited with founding L.A.’s Koreatown in the early 1970s when he opened a small grocery on the corner of Olympic and Harvard boulevards and began importing products from Korea.
Lee’s market fast became a gathering point for L.A.’s new Korean immigrants, who had begun streaming into the country at a rate of some 30,000 a year after U.S. immigration laws were liberalized in 1965. It did not take long for other immigrant entrepreneurs to follow Lee’s lead, opening shops, markets, restaurants and professional offices along Olympic Boulevard.
Soon, a full-fledged Koreatown had blossomed.
Just three blocks away, Wilshire Boulevard was another world entirely.
With its tony department stores and highrise corporate headquarters buildings, the thoroughfare was widely touted as the “Fifth Avenue of Los Angeles.” But despite its history as one of the city’s top corporate addresses, the Mid-Wilshire real estate market has been severely depressed in recent years, often registering vacancy rates of more than 30 percent.
Even now, with much of L.A.’s office market on the mend, Mid-Wilshire’s third-quarter office vacancy rate of 25.9 percent was the second highest in the city, according to Grubb & Ellis Co.
But while most in L.A. have looked at Mid-Wilshire and seen only empty office buildings, a number of Korean investors with much the same spirit that a previous generation of entrepreneurs brought to Olympic have sensed opportunity.
Over the past eight years, Korean American-led investment groups have quietly purchased 23 buildings in the area, and now own almost 4 million square feet of space on Wilshire between Vermont and Crenshaw about 40 percent of the area’s total office stock.
It is not difficult to see how much those transactions have changed the character of Wilshire Boulevard.
Along the busy stretch between Vermont Avenue and Crenshaw Boulevard, signs bearing the bold, boxlike characters of Korean script have become as commonplace as the district’s classic Art Deco architecture.
“Mid-Wilshire is becoming more and more oriented around Korean business,” said Benjamin B. Hong, president and chief executive of Nara Bank, a Korean American bank. “Korean businesses are agglomerating.”
But some business owners in the area say it’s misleading to extend the Koreatown borders to include the entire Mid-Wilshire District, which is also known as Wilshire Center.
“Obviously, (Korean Americans) are an integral part of the revitalization of Wilshire Center,” said Gary Russell, vice president of the Wilshire Chamber of Commerce and an architect who has had his business on the boulevard for the past 15 years.
“But is not fair for the whole area to be designated as ‘Koreatown,’ ” Russell added. “We are a dynamic, multicultural business area. I am not Korean and my business has no reason to be in Koreatown.”
But Korean investment activity in the area shows no sign of abating, according to Michael M. Lee, managing director of the corporate services group at Charles Dunn Co. Last month alone, Lee said he received inquiries from seven different Korean American investors looking to purchase property in the area.
The community’s most active player by far is David Y. Lee, a North Hollywood internist who has purchased seven Wilshire Boulevard office buildings since 1994 four of them in the past 14 months alone.
Lee seldom speaks to the media and is not active in any of Koreatown’s business or civic organizations. Lee did not return phone calls from the Business Journal.
But according to real estate sources, Lee operates this way: He raises his initial investment capital by putting together groups of 20 or 30 Korean Americans mostly physicians and other professionals with funds to invest and finances the remainder of the deal through Korean American and mainstream banks.
And he has been successful in a market which has proven quite difficult for others.
When Lee purchased The Towers on Wilshire in 1995, for example, the building was half empty; now the vacancy rate has been whittled down to just 5 percent, according to the building’s manager, Raymond Rho.
Rather than the large corporate anchor tenants that characterized the Mid-Wilshire market in the past, the new tenants tend to be small startups occupying less than 3,000 square feet many of them being launched by 1.5-generation Korean Americans.
It’s not only the area’s office market that is slowly being transformed.
The growing number of Korean American office workers in the area has triggered several large retail developments. A 140,000-square-foot shopping and entertainment center is underway at the shuttered former I. Magnin building on Wilshire Boulevard near Vermont Avenue; and a $20 million sports-oriented retail center is planned for a 2.25-acre former parking lot at 3680 Wilshire Blvd.
Both projects are being developed by Korean Americans. And although each is likely to appeal to Wilshire-area workers and residents hungry for new retail options, they both were conceived with an Asian audience in mind.
“This will be a great benefit for the whole area,” said Kee W. Ha, president of Hankook Property Managment Co. Inc. and project manager for the redevelopment of the former I. Magnin building. When completed in mid-1998, the former department store will include a bowling alley and a business club, as well as retail stores and a food court. “This will restore the old Wilshire.”