LOS ANGELES — Downtown real estate redevelopment here is taking root, reflected in an influx of fashion district projects owned by a new generation of Korean-Americans.
A decade after the San Pedro Wholesale Mart opened in the fashion district, helping to give visibility to the Korean-American apparel community, the thriving area is raising its profile.
Since last year, dozens of showrooms leased by Korean-Americans have opened along the key corridors of San Pedro and 12th Streets, feeding off the traffic of the San Pedro mart.
Three weeks ago, the development company Los Angeles Fashion Center LP broke ground on a showroom project called LA FACE on San Pedro Street and 14th Place, located on the southeastern border of the fashion district. Expected to open in late 2006, the estimated $70 million development is 560,000 square feet and will offer 196 condominium showrooms ranging in price from $360,000 to $640,000.
So far, 120 have been sold to Korean-American business owners and prices are projected to rise 15 to 20 percent in the next selling phase, said Alix Chang, operations manager of Khan Development Co., the sales and marketing arm for LA FACE.
“We’re seeing tens of millions of dollars being poured into the district,” said Kent Smith, executive director of the L.A. Fashion District Business Improvement District, noting the area has added more than 200 businesses in the last two years.
The momentum is at odds with employment figures in the industry. Los Angeles County had 107,700 apparel and textile jobs in 1999. That figure dropped 29 percent to 76,000 last year as companies went out of business or relocated, according to the Los Angeles County Economic Development Corp.
But statistics don’t tell the entire story, said the organization’s chief economist, Jack Kyser. There are an estimated 90,000 to 100,000 Korean-American garment workers and manufacturers in the sector working in at least 2,100 companies.
The increase comes as the Korean-American population in Los Angeles County reached 186,350 in 2000, up more than 28 percent compared with 1990, according to the latest census statistics.
Korean-Americans represent an immigrant group that is becoming more prominent socially and economically. The neighborhood about 5 miles west of the fashion district, on Wilshire Boulevard, is the home of several new Korean-American-owned businesses. Developers are turning high-rise buildings into luxury apartments and offices. The corridor is home to the 336,000-square-foot Aroma Spa and Sports Center, which costs $24,000 to join.
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“We know Koreans are a major force in the industry, but as the economy shifts gears many aren’t being captured by established surveys,” Kyser said, because they work independently or are in the ebb and flow of family-run businesses.
A growing wholesale buyer base, as in the apparel industry in general, is generating demand for this city’s typically young contemporary fare. As a result, wholesale customers are shopping the Korean-American showrooms. Used to smaller, independent boutiques, these buyers appreciate the ease of ground-floor showrooms, available inventory and cash-and-carry policies. Bigger chains, such as Wet Seal, Forever 21 and Charming Shoppes, also are taking advantage of the fast-changing merchandise, said Ilse Metchek, executive director of the California Fashion Association.
“The people there rep and often own the lines and can control production,” she said.
The business model represents a shift from the way buyers typically work with showrooms at downtown’s wholesaling epicenter, which is marketed as the Intersection, constituting the California Market Center, the New Mart, the Cooper Design Space and the Gerry Building. The buildings, which operate with five buying markets a year and do not inventory merchandise, are also in the midst of change.
The Gerry Building is in escrow to a group of Los Angeles investors, said Larry Hudson, the building’s general manager. The market center has been sold to Jamison Properties, which is owned by David Lee, a Korean-American.
“We’re happy to see new buildings come on board,” said Ben Lee (no relation to David Lee), leasing director for the market center. “Los Angeles is at a point of extreme potential and we can all share in the wealth.”
The rise of Korean-American influence is reflected in the heightened competition in the marketplace, particularly when it comes to denim and sportswear. Many in the industry feel they have to raise the bar in terms of product quality and image to compete with fashionable products sold by mass marketers such as Target and Kmart.
“They’re upgrading themselves,” said Samuel Kim, former president of the Korean-American Garment Industry Association and owner of misses’ denim line Mu Jeans, sold at Nordstrom. “Before, the goods were cheaply made. Now they’re kicking up the workmanship, and to bring out the bigger pencils, they’re making the environment look better, as well.”
The new storefronts on 12th Street are emblematic of the approach. The colorful buildings in hues of rust, yellow and sage feature showrooms with contemporary, white interiors or those tiled and accented with plants. Dressed mannequins at the doorways are the calling cards seeking to beckon passersby.
Monica Rivas, a sales rep for Caramel, a four-month-old wholesale outlet on 12th Street, said a stream of buyers from small boutiques to the 5-7-9 store chain have been buying the line’s tunics and camisoles shipped from Brazil and adorned with beading, crinkling and ribbons. Wholesale prices range from $10 to $15.
“It’s been good,” she said.
Wizeman Kangavari, managing partner at K.I. Group, has spent about $20 million to $30 million since 2001 opening four showroom developments housing accessories and women’s wear. The company’s latest and biggest is Pico Regency Plaza, a 60,000-square-foot building with 50 showrooms. He said Pico Regency, which is to open by the end of the year, is 75 percent leased to Korean-American tenants.
“You build it and they will come,” he said.
Even if it’s not built, they are still flocking as real estate and rental prices soar. Buildings such as the American Garment Center, which opened last year on San Pedro and Pico with 27 showrooms, are doubling in worth, said owner Kamran Gharibian. Rising rents are another reason for the appeal of showroom condos, a common business enterprise in South Korea and Asia, in a district where ground-floor rents can command $8 to $10 a square foot, a price on par with the Third Street Promenade in Santa Monica.
An unconventional approach to renting space — a practice often requiring up-front money and on-the-spot quotes — pushed Philip Chang to pay an estimated $360,000 for a unit at LA FACE, the project designed to resemble an indoor mall. Chang, the owner of Children’s Concepts, a maker of dresses for children and preteens near Pico Boulevard, said he has been paying $7,000 in monthly rent.
“Landlords are making so much money off of us and this was a good chance for me to have a permanent place in the district in which to grow the business,” he said.