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If you build it, they will come

  • A view of the Hilton Los Angeles San Gabriel from Valley Boulevard — often thought of as the main thoroughfare of the San Gabriel Valley. The Hilton was one of the first projects to begin the street's transition from quiet and unassuming, to bustling and up-and-coming. Photo by James Cutchin

  • The Sunny Plaza shopping mall. Mr. Sunny Chen's first property in the San Gabriel Valley, located on Valley Boulevard several blocks down from the Hilton. Photo by James Cutchin

  • A view from the construction site of Landwin's new luxury hotel, retail and condominium complex, located adjacent to the Hilton. Photo by James Cutchin

Location

San Gabriel , CA United States

When the Hilton Los Angeles San Gabriel opened in 2004, there was little obvious market in the city for a high-end hotel. “At the time, there was virtually nothing out here,” said Carl Bolte, hotel and development expert at property developer Landwin Investments,

“When we first started building, people were very skeptical,” he said. “They were asking why you would build a full-service hotel in that area.”

Since the Hilton first opened, the region has experienced an explosion of Chinese visitors, with 1.2 million reported countywide in 2018 alone. Despite fears that increasing tensions between the U.S. and China might deter potential tourists, 2018 continued the trend of record-breaking year-on-year growth in Chinese tourism that has persisted for most of the current decade.

Foreign investment is following growing numbers of these visitors to cities across the San Gabriel Valley. High-end hotels, shops and restaurants are reshaping the landscape, built by savvy developers looking to cash in on this burgeoning market.

Landwin, established in Taiwan in 1980 and owned by developer Sunny Chen, was one of the first-movers on the road to transforming the San Gabriel Valley into a high-end tourist destination. When the group’s first Los Angeles development, the Sunny Plaza shopping mall, began construction in San Gabriel in the late 1990s, it was across the street from a drive-in movie theater.

“Where do you normally find those? — usually out in the middle of nowhere,” Bolte said.

The project’s skeptics were soon proven wrong. A growing influx of Chinese tourists and visiting real estate investors provided the hotel with a steady stream of business. Bolte said the Hilton often had to turn away large group bookings because there was no room for them.

Until recently, the Hilton enjoyed a monopoly in the area. In early 2018, the Hazens group, a Chinese property developer based in the southern city of Shenzhen, opened its first location in the San Gabriel Valley — the Sheraton Los Angeles San Gabriel.

“It was difficult to convince Sheraton and the hotel management company that it [San Gabriel] was a good location,” said Teddy Yang, hospitality operations director at Hazens. “They were concerned about the kind of [room] rate we would be getting … They didn’t think the population was there to support a high-end hotel.”

Now, the Sheraton now consistently operates at around 85 percent occupancy despite being open less than one year, according to Yang.

A long-time resident of the San Gabriel Valley, Yang immigrated to the United States in the mid-1980s and has spent the last three decades watching the region’s Chinese population expand eastward from its original bases in Monterey Park and Alhambra.

According to a recent report by Asian Americans Advancing Justice (AAAJ), the San Gabriel Valley’s Asian-American population grew by 22 percent between 2000 and 2010. The study also showed that the area’s white population shrank by 17 percent over the same period. The shift was one of many changes driven, in part, by the continuous flow of immigrants from China.

Approximately 72 percent of Chinese living in the San Gabriel Valley are foreign-born, according to data from the U.S. Census Bureau’s American Communities Survey. The more recent Chinese immigrants arrive in America with vastly different expectations from those who came before, according to Yang.

“Basically, in this area we have two types of immigrants,” Yang said. “The long-term immigrants have been here for the past 30 years and are used to humble-looking shops and restaurants. Now that China has developed, people coming here are disappointed in these humble places.”

Yang recounted the story of one Sheraton guest, who told him that they loved the hotel but went outside and felt it was a bit too quiet and dull in San Gabriel.

Hazens intends to address this market gap with a future development across the street from the Sheraton, according to Yang. The planned six-story complex will feature high-end shops and restaurants on the ground floor, with five floors of luxury condominiums above.

“We’d like to build higher, but we’re not sure if the city [of San Gabriel] will allow it,” Yang said.

Roy David Southerland, overseas procurement manager for Hazens, said that gourmet restaurants and luxury retail are exactly what Chinese visitors to the San Gabriel Valley are coming to expect.

“Chinese people love that level of quality,” Southerland said. “They don’t care about the price. A $200 dinner is nothing to them.”

Landwin also has plans for new developments catering to wealthy Chinese tourists. Most of the block adjacent to the Hilton San Gabriel is currently a large construction site. When complete, it will feature a 222-room Curio hotel, an upscale boutique brand by Hilton. The development will also include 80 luxury condominiums and 50,000 square feet of retail space.

Not everyone is completely satisfied with the recent changes. John McMahon, 75, is a retired civil engineer who has lived in the San Gabriel Valley for more than two decades. He said that the development has been a mixed blessing for the region.

“There were some pretty lousy buildings that have been taken down, so I appreciate that,” McMahon said. “On the other hand, the roads haven’t kept up with the development so everything is congested now.”

McMahon, who worked for the Los Angeles Department of Water and Power for 36 years, said that he believes developers in the San Gabriel Valley should be required to make more infrastructure improvements around their projects.

“I worked in L.A. for many years and they made developers improve roads a mile away,” McMahon said. “I think it helped alleviate the congestion in those areas.”

McMahon said that he is also concerned about rising prices and the pressure they place on less-well-off locals.

“The cost of things are going up, especially the rent,” McMahon said. “Some of the small businesses that I liked to patronize have gone out of business due to the high rent.”

The AAAJ report says that the nearly 82,000 Asian-American businesses in the San Gabriel Valley tend to be small, employing just over five workers on average. These businesses are likely to be more sensitive to rising costs and in greater danger of being priced out by high rents.

The same study found that nearly a third of Asian-Americans in the San Gabriel Valley are low income, earning less than $48,000 per year for a family of four. It suggests that, if economic opportunities do not increase alongside rising costs, these groups may have difficulty coping with the changes occurring in their communities.

Regardless of the outcome, McMahon said he believes that development in the San Gabriel Valley will continue along its current trajectory for the foreseeable future. “It’s gonna be more of the same,” McMahon said, “more overseas investment, higher-density development and a lot more infrastructure problems.”

Teddy Yang, while more optimistic about the outcome, also said that he believes development in the San Gabriel Valley has passed a tipping point.

“Now that this has started, it’s hard for people to go back to accepting the humble shops. Their expectations have changed,” Yang said. “There’s no going back now.”

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