PRINT THIS STORY:

CHANGE TEXT SIZE:

Saehan bets on $275 million Lakeside project

As South Korea emerges from the economic depression that has battered Asian economies for the past two years, developer Saehan Industries is betting on better times with a $275 million retail and entertainment complex called Lakeside.

Saehan, a textile manufacturing and development company based in Seoul, plans to develop a $2 billion, master-planned community with the 2.8 million-square-foot Lakeside mall as its centerpiece. The 210-acre property in Kyungsan has been owned by Saehan for 25 years and used for a textile plant and other related facilities.

Lakeside will be the first project of its kind in Korea. Most malls have been built vertically in Asia, and in South Korea in particular, but Lakeside's developer will break that tradition by building horizontally.

The developer is expected to break ground in March 2001, and no grand opening date has been set. Saehan said it hopes for 70% of the retailers to be Korean, with foreign retailers making up the remaining tenants, and the bulk of the project financing coming from abroad.

The three-level mixed-use center will be anchored by a 16-screen multiplex theater and two Korean retailers, which have yet to be announced. True to its name, the mall will be built along Joongsan Lake with views of distant mountains.

"The look will be very contemporary, very Western. This concept has great appeal to people in Korea," said David McIntyre, U.S. development advisor to Saehan, working for Sasaki Associates, Watertown, Mass.

"There are very few leisure attractions in Korea. People are seeking an alternative format, away from traditional vertical shops.''

The Lakeside development program plans 500,000 square feet for department stores, 490,500 square feet for specialty stores, and 2,500 parking spaces on two underground floors beneath the mall. It will have restaurants, a playhouse, television studios and a roller coaster. Visitors also will be able to take tours of the TV studios.

A stream will be built that will flow through the mall and empty out into the lake. The shopping center will have plenty of skylighting. Just outside will be a boardwalk promenade along the lake.

The master-planned development, to be built over 20 years, will have 60,990 square feet of residential space, 2.8 million square feet of retail, 4.6 million square feet of office, 630,000 square feet of entertainment, 350 hotel rooms and 160,000 square feet of public facilities.

Kyungsan, a college town, is a 20-minute drive from Taegu, South Korea's third-largest city. More than 3 million people live within the trade area, according to Saehan, with 40% of the population within the 20 to 39 year-old age group. There are nearly 830,000 households and 11 universities with 110,000 students.

Since the land Lakeside will be built on has housed textile factories for the past 25 years, there has not been much in the way of major retail, said McIntyre. Until now shoppers have been driving to Taegu.

According to Saehan, the current market rents in the Taegu metropolitan area for retail range from $92 to $102 per square foot and for restaurants from $27 to $32 per square foot.

Saehan has been negotiating with: The Body Shop, The Gap, HMV Records, Esprit, J. Crew, Toys "R" Us, Eddie Bauer, Pier 1 Imports, United Cinema International, Nike and Starbucks, McIntyre said.

The Gap and HMV already have numerous stores in Japan, but none in South Korea.

Despite past and present economic and political problems in South Korea, a number of international retailers are already operating throughout the country, many with expansion plans.

Some of the bigger retailers already operating in South Korea include: Calvin Klein, Costco, General Nutrition Cos., The Gymboree Corp., Kinko's, Levi Strauss & Co., Mrs. Fields, Oshman's Sporting Goods, Tiffany & Co., Warner Brothers Studio Stores and Wal-Mart. TGI Fridays, currently operating 10 restaurants in Korea, will add one in Taegu in the near future.

The presence of these chains belies the continuing difficulty in locating in Korea. But change may be on the way.

"Frankly, the other countries [in Asia] present less of an obstacle,'' explained McIntyre. "Korea knows that and is working to remedy that.''

South Korean President Kim Dae-Jung is loosening restrictions on direct foreign investments, legislation that would ultimately remove 51.7% of a total of 667 regulations.

One obstacle, according to Saehan, is that in Korea a tenant must put down half the year's rent as a deposit, while there is no such requirement in the United States.

Right now, though, educating more companies about Korea is the top priority.

"If what you know about Korea comes from M*A*S*H or CNN, you'd be apprehensive to come here,'' McIntyre said. "But once you're in Korea, you'll see it is an attractive market to be in. You'll want to be in Korea.''