Exercise your imagination, and you can almost see it rising, a herculean, two-pronged skyscraper marking the transition from ocean to land on South Korea‘s northwestern coast.
In the mind’s eye, the imposing structure dwarfs 60-story towers nearby and greets visitors looking out from planes flying in and out of the country’s main international airport in the port city of Incheon.
For now, the 2,000-foot-tall 151 Incheon Tower is just a plan, a bold design concept manifested only in blueprints and scaled architectural models. In five years, Atlanta-based development company Portman Holdings plans to have made the dream, designed by John Portman & Associates, a reality.
Portman is leading the four-member consortium charged with constructing the 151-story colossus, a super high-rise tower poised to become an iconic Korean symbol and a giant first step toward a $17 billion mixed-use development. The development, engineering and construction arms of the Samsung and Hyundai conglomerates are investors and builders on the project. Advisory firm SYM Associates is providing financial guidance.
The project is part of Songdo, a $42 billion city-within-a-city project set to transform Incheon into an international business hub. Its first phase opened earlier this month, unveiling a huge central park, a convention center and the first batch of residences and hotels.
Portman is no stranger to projects that shape the cities where the company works. Namesake architect John Portman Jr. designed the Peachtree Center, AmericasMart and the SunTrust Plaza in downtown Atlanta, all of which transformed the city’s international ambitions as much as its skyline.
“Mr. Portman certainly is a visionary,” said Craig Lesser, Georgia’s former economic development commissioner, who traveled to Incheon Aug. 28-29 to give a talk about how Georgia landed Korean automaker Kia Motors Corp.‘s $1.2 billion plant.
“He did some things very early on in Atlanta’s modern history that really helped get us where we are today.”
That said, this project surpasses any of Portman’s previous undertakings.
“This definitely is bigger than anything we’ve ever done,” said John C. (Jack) Portman III, vice chairman of Portman Holdings and CEO of John Portman and Associates, its affiliated architectural firm. When GlobalAtlanta spoke with Jack Portman, he had just returned from a month-long trip to manage existing projects and pitch new ones in China, Denmark, India and Korea.
The Incheon tower would be the second tallest building in the world behind the Burj Dubai, assuming nothing surpasses it between now and completion. It is a major component of the first phase of Portman’s development, which will have a total of 6 million square feet of space. Within the tower, plans call for 54 floors of apartments, more than 1.5 million square feet of offices, restaurants, stores, an observatory and a five-star hotel.
The building will have more than 100 elevators, and the company is working with municipal and national officials to rewrite building codes that were written when these kinds of mega-projects weren’t architecturally feasible, said Jim Kohlhoff, Portman’s managing director in Korea.
“No building this tall has ever been built in Korea, so a lot of the building codes in Korea just don’t apply,” he said.
To give some perspective, Mr. Kohlhoff noted that the tower would be almost three times the height of the 73-story Westin Peachtree Plaza hotel in Atlanta, another Portman building.
“Just think of three of those towers stacked on top of each other,” he said.
What’s more, the $5 billion tower and some surrounding residential units only make up the first phase of Portman’s 1,500-acre project, called Songdo Landmark City. In its entirety, Landmark City will house an estimated 68,000 people.
Once complete, the community will have a golf course, a mile-long lake with marinas, green spaces, retail villages and some 25,000 housing units.
Portman is undertaking this feat as the U.S. is enduring what some experts call its worst downturn since the Great Depression. With the global economy in a slide, cash-strapped banks and investors have been reluctant to lend to developers.
The Korean government’s massive supply of liquidity has helped the country stave off the worst effects of the crisis, said Yoo Seon-jong, a professor in the Real Estate Studies department at Konkuk University in Seoul.
Banks are relatively confident, and small- and medium-sized companies are borrowing actively, while larger players are still waiting for the environment to stabilize. All in all, “The negative impact of the crisis has been quite limited in Korea,” Dr. Yoo said.
Still, Mr. Portman said banks are unwilling to “step up” at this time, so the consortium will primarily use shareholder equity to finance the project initially. Piling work should begin in September, he said.
“We’re attempting to generally maintain the original development schedule. We anticipate that more debt will become more available next year,” Mr. Portman said.
The nature of the Korean real estate market could help ameliorate part of the financing conundrum.
“Differing from what typically happens in the U.S., soon-to-be owners of the condos [apartments] pay the whole price in advance, even before construction work begins or financing is arranged. Therefore, as long as the developer secures the land there’s little or no need to finance at all under the Korean ‘pre-sold and pre-paid’ system,” Dr. Yoo said. “(Songdo) still exhibits strong pent-up demand for the condos. As long as the condo market remains at a fever pitch in this area, Portman will encounter no serious problems.”
Acie Holt, a Portman vice president of development who lives in Atlanta but travels to Korea frequently for the project, said it’s also vital to take a long view when talking about financing a development of this magnitude.
““It’s important to understand that the Songdo Landmark City project, while very large in scale, is in actuality the sum of many smaller, more manageable components,” he said. “Each phase will have its own opportunities and challenges in financing. We are using every financial tool and resource available to us in order to be successful in such a challenging global market.”
Even with the uncertainty, Mr. Portman remains confident. He takes solace in the fact that as the anchor of Songdo’s reinvigorated international business center, his project is emblematic of Incheon’s – and Korea’s – economic future.
While integration with the world economy has harmed Korea during the crisis, Incheon leaders are betting on globalization as a prime engine for future growth, and they are laying their credibility on the line to achieve it.
Since Aug. 7, the port city about 30 miles outside of Seoul has been hosting the 80-day Incheon Global Fair and Festival to show off its plans to the world. Invited by Portman Holdings, a group of Atlanta business leaders and university representatives participated in “Atlanta City Day” on Aug. 28-29 and made a series of presentations there about investing and living in Georgia.
Jack Portman was at the fair’s opening with South Korean President Lee Myung-bak and Incheon Mayor Ahn Sang-soo.
Mr. Lee has steadily touted the benefits of international trade since taking office in 2008.
Mr. Ahn is “an extraordinary guy,” Mr. Portman said. “He is such a diligent, visionary worker regarding what he wants there and how to bring the right resources together.”
The cooperation between the two political leaders on Songdo shows a cohesive focus that underpins the Incheon developments, he added.
“The Korean economy is looking better already, so we’re optimistic,” Mr. Portman said. “This is such an important, high-profile project that we have tremendous support from the president and the mayor all the way down. This may be the most important project in the country because it’s going to re-establish it as a major business and international trade center.”
The Portman consortium has a profit-sharing agreement with the government as part of the land acquisition cost. When the deal was made, the land where the Landmark City project will sit was submerged beneath the Yellow Sea. In the late 1990s Incheon began efforts to expand land mass by filling in some coastal areas with earth dredged from the ocean floor, a relatively routine process called land reclamation. Some of Portman’s 1,500 acres are yet to be reclaimed, but piling work can go on and should begin in September, Mr. Portman said.
In the meantime, home-buying activity looks encouraging, even amid the downturn, said Mr. Kohlhoff. As incomes grow, standards of living are rising and a new generation of Koreans is becoming more apt to take advantage of the international style of living that the Portman project will offer.
“We’re seeing a different consumer growing in Korea that is now less inward-focused and now more outward-focused about some of the things that they look for,” Mr. Kohlhoff said. “It’s the classic story of socioeconomic rise.”
Nowhere is that more apparent than in the heart of Songdo at the headquarters of the Incheon Free Economic Zone, or IFEZ. The zone was created in 2002. Songdo is the heart of its international business center. IFEZ will eventually include an airport/logistics city surrounding the Incheon airport on Yeongjong island and a finance and leisure city in an area called Cheongna.
In early July, Portman leaders took GlobalAtlanta to Songdo to observe its progress. Looking south from the observation deck at IFEZ, bulldozers could be seen smoothing out newly reclaimed land. To the north, the nearly completed 65-story Northeast Asia Trade Tower stood in the foreground. In the distance, barely visible through fog, the 7.4-mile Incheon Grand Bridge crossed the Yellow Sea, linking the airport on Yeongjong island more effectively with coastal destinations to the south.
The bridge is the longest in Korea and cost more than $1.4 billion. Officials hope to open it to the public in October. It will cut travel time from Songdo to the airport to about 15 minutes from the current hour or more. Portman’s tower will be adjacent to where the bridge ends, making it one of the first structures travelers see when they enter the Korean mainland.
For all the government’s ambitions, coordinating the necessary work with various government entities on large-scale developments in Korea is still difficult in some ways, said Tom Collins, who worked at IFEZ for two years before joining Portman’s Korea office.
Tremendous infrastructure is needed to support large projects like Portman’s, and as Koreans can make decisions quickly, care must be used to make sure certain details are in place, Mr. Collins told GlobalAtlanta.
“Once they make a decision to go forward, sometimes you just have to get out of the way, because their will is quite strong. It can be a very positive thing but can also pose challenges from our perspective,” he said.
A project of this magnitude is complex, requiring a lot of flexibility and patience on the part of the developers, Mr. Collins said.
“Many companies get worn down, but I’m confident we’ll have the wherewithal to keep up and succeed,” Mr. Collins said on the observation deck at IFEZ, the unfinished top floors of the Northeast Asia Trade Tower in full view. “In any case, it will be a marathon.”
If the past is any indication, Portman has the endurance. The firm has built dozens of buildings in China over the two decades since helping pioneer real estate investment there with a mixed-use project in Shanghai that began in the early 1980s.
Breaking into Korea has presented different challenges and rewards, Mr. Portman said.
“In China, it was just opening up so it was totally virgin territory, in terms of any development at all, but more so in the fact that the government people involved had no experience whatsoever in dealing with projects like this, whereas Korea is at a more advanced stage. They’re very experienced, very sophisticated, very smart, so it’s very different in that regard,” he said.
The Songdo project will take at least 15 years to complete and has already provided a beachhead for a long-term presence in Korea.
“Like in China, like in India, we have established ourselves in Korea on a permanent basis,” Mr. Portman said.
