Why do some neighborhoods transition and become the hottest addresses in town seemingly overnight while others stagnate? One trend my team and I are watching closely this year is the role of tech in neighborhood place making. Earlier this year, we took a closer look at how the co-working revolution is reshaping New York real estate from Midtown East to Brooklyn. Out in LA, tech is also the driving force behind residential property spikes, especially along “Silicon Beach”.
This February, the mixed-use project Runway Playa Vista, envisioned as the new “downtown hub” for the Silicon Beach tech scene, sold to a Dallas-based developer for a reported $475 million. A miniscule, pistachio one-bedroom cottage in Venice turned heads when it hit the market for $1.5 million last fall. And a 280-square-foot “hut” with no kitchen drew national attention when its owners listed the property at $1.275 million.
Silicon Beach Upends LA Luxury Real Estate Market
Welcome to Silicon Beach, a four-mile stretch west of the 405 Freeway that includes Santa Monica, Venice, Marina del Rey, as well as the new master planned community of Playa Vista. While tech companies have opened offices throughout the strip, much of the action has been headquartered in Venice. Once a quirky bohemian enclave famous for its bodybuilder beaches and surfing scene, Venice is now home to a new crop of technology titans who are ready to drop some serious cash on their homes and company headquarters.
Google kicked off the transformation in 2011, renting over 100,000 feet of Venice office space, including space in a Frank Gehry-designed “Binoculars Building”. Snapchat rented 40,000 square feet of prime office space on Venice’s main thoroughfare, Abbot Kinney, and now rents a $25,000 per month penthouse right along the ocean, replete with a 5,000 square foot sun deck, fire pit, and Jacuzzi. Snapchat co-founder Bobby Murphy dropped $2.2 million on a Larry Scarpa designed two-bedroom – a steal back in 2013, despite being nearly double the median price of neighborhood homes.
The Silicon Beach boom completely transformed Venice’s retail spaces, too. Fashion editor favorites like Rag & Bone, Iro, and Vince line trendy Abbot Kinney, which GQ named the “coolest block in America”. Tech millionaires close deals at Gjelina, Zinque, and The Tasting Kitchen, three of the hottest dinner reservations in town. Need a facial or massage? Those in the know are flocking to cult French favorite Caudalie. It’s a far cry from the body builders, beach bums, and surfers who called Venice home just five years ago.
$475-Million Deal Positions Playa Vista as the Next Big Tech Hub
With inventory shrinking and prices skyrocketing, tech is already looking for the next hot spot. They’re finding it in the new master planned community of Playa Vista, located just east of Lincoln and south of Marina del Rey. It’s here that a Dallas investment firm reportedly paid $475 million for the mixed-use “Runway” development that’s set to become the planned community’s new downtown.
Facebook, YouTube and Microsoft all lease office space, making the new Runway development a veritable “who’s who” of the tech world. Built on a portion of aviation mogul Howard Hughes’ old airport runway, the development is already home to a luxury movie theater, a Whole Foods market, banks and restaurants. Office rent per square foot is up 77% in the last five years and median home prices jumped 15% between 2014 and 2015, reports the Los Angeles Times.
From LA to NYC and Paris to London, the continued impact of tech and co-working on luxury real estate is a trend my team and I will be watching closely this year.
Los Angeles has almost become my home away from home – since 2006 I frequently travel to Beverly Hills, Santa Monica and Malibu to meet with clients. Need a Southern California broker recommendation? Contact me for a direct referral.