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.