Tech Money Brings New Players to Los Angeles’ Real Estate Game
With new properties ranging from hillside mansions to opulent downtown lofts, Los Angeles’ luxury real estate market is enjoying a boomlet. In addition to the usual suspects—Hollywood money, Pacific Rim investor —a new player is driving demand up for prime residential units.
The city’s tech scene, dubbed “Silicon Beach” for its concentration in Santa Monica, Venice Beach and Playa Vista, is attracting millionaires and billionaires at a rate that may soon rival San Francisco and New York.
David Kramer of the David Kramer Group pointed out that these buyers tend to skew much younger than others in the market. They “haven’t gotten to having families yet,” he said.
Buyers from the tech world can be separated into three broad categories: out-of-towners looking for showcase homes; engineers buying deluxe digs within commuting distance of their workplaces; and post-exit founders and venture capitalists with more flexibility, time and money.
One complicating factor in Los Angeles is the city’s well-known traffic; an overwhelmed local infrastructure and the region’s multinodal nature make long commutes especially unattractive for tech workers who work long hours. This has led to sharp price increases in neighborhoods adjacent to Santa Monica, Venice Beach and Playa Vista, where most of the tech companies are headquartered.
This shift of money is changing the West Side’s socioeconomic landscape. In 2011, for example, Google came under fire for opening its new complex in a part of Venice Beach with an extensive homeless population. Five years later, homes in walking and biking distance of this local Googleplex are among the area’s most desirable and expensive. In neighboring Santa Monica, property values have risen 14.7% over the past year.
Kramer sees a fundamentally changed house-hunting process. “When I started 25 years ago, people wanted to be in the hills,” he said. “Now they want to be in the center of things where they can walk… It is much more like New York now; people desire things like higher density that previously were considered undesirable.”