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SM Entertainment, 10-Year Plan for ‘SM Town LA’ Abandoned

[비즈한국] The SMT (SM Town) LA project, which SM Entertainment has been pushing for over a decade, has officially been scrapped. It has been confirmed that the building purchased for this project will be remodeled and then put up for sale. SMT LA was a project initiated by SM Entertainment to establish a K-pop cultural complex in the heart of Los Angeles (LA). However, as remodeling work on the building continued to be delayed, speculation grew that the construction plans had been abandoned.

It is reported that SM Entertainment purchased the commercial building in the heart of LA's Koreatown in July 2013 for approximately $4 million (5.6 billion KRW). Built in 1923, the facility is a commercial property with a total floor area of 13,046 square feet (approx. 1,212㎡, 366 pyeong). According to the Los Angeles County Assessor's Office, the 2024 official land value is approximately $2.64 million, with the building valued at approximately $2.16 million, totaling an appraised value of about $4.8 million (6.7 billion KRW).

The building was intended to be a cultural complex using the ‘SM Town’ brand, featuring performance venues, restaurants, and experiential spaces. Since the era of former CEO Lee Soo-man, SM Entertainment had been pursuing the building's remodeling with the goal of creating a global hub for Hallyu (Korean Wave) content in LA. At the time, the city of LA named the intersection of 6th Street and Oxford Avenue, where the building is located, “SM Entertainment Square.”

However, due to years of construction delays, the building was left with a damaged exterior. As recently as 2020, SM Entertainment CEO Lee Sung-su showed commitment, stating, "We are also building SMT LA, an expanded version of SMT Seoul, which will include the SM Square." However, following the complete severance of ties with former Chief Producer Lee Soo-man, the SMT LA project appears to have been effectively wiped off the slate.

Some had speculated that SM Entertainment’s 2013 purchase of the building was funded by Lee Soo-man’s personal capital. However, an official from Blooming Grace, a company associated with the former chief producer, told BizHankook, “The SMT LA building has absolutely nothing to do with former Chief Producer Lee Soo-man.”

Ultimately, with SM Entertainment deciding to step away from the SMT LA site, the LA SM Town project, pushed for over 10 years in Koreatown, will never see the light of day. A local industry source remarked, “A large poster of RIIZE was hanging on the building's exterior, but it was removed about two months ago. There used to be a ‘For Lease’ sign, but now there are no signs at all.” SM Entertainment stated to BizHankook, “We plan to sell the building after completing the remodeling.”

SM Entertainment has also relocated its U.S. office. They had originally leased a business building adjacent to the SMT LA property to serve as their U.S. branch office, but last year they moved out of Koreatown to Culver City, LA. The address of this building is the same as that of SM & Kakao Entertainment America Corp, a North American joint venture established by SM Entertainment and Kakao. An SM Entertainment official stated, “The business building was one we previously leased and used, but it is not currently in use.”

SM Entertainment also became entangled in lawsuits during the SMT LA project. In 2023, the local construction firm for the SMT LA building filed a damages suit against SM Entertainment’s U.S. branch and its affiliates for approximately $3.76 million (approx. 5.2 billion KRW), which is currently ongoing. The local contractor claims they suffered damages due to construction delays caused by frequent design changes. In relation to this, SM Entertainment stated in its 2024 business report, "The final outcome of the litigation and the impact it may have on the consolidated financial statements cannot be predicted at this time."