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Tech Money Brings New Players to Los Angeles' Real Estate Game

Flush with capital, Silicon Beach is changing how Angelenos shop for homes

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Driven by abundant tech money, property values in Santa Monica (shown) and Venice Beach have exploded in recent years.

Visions Of Our Land / Getty Images
Driven by abundant tech money, property values in Santa Monica (shown) and Venice Beach have exploded in recent years.
Visions Of Our Land / Getty Images

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. Tesla and SpaceX’s Elon Musk, for instance, lives in a 20,000-square-foot Bel Air home, which he purchased for $17 million in 2013; he owns another home closer to SpaceX’s headquarters, which cost $6.75 million. Evan Spiegel, CEO of social media giant Snapchat, finally moved out of his parents’ house in late 2014 and into a $3.3 million, three-bedroom home in posh Brentwood. Even non-resident tech moguls are buying in. Napster co-founder Sean Parker bought the modernist icon Brody House in Holmby Hills from Ellen DeGeneres for nearly $39 million in 2014; Minecraft creator Markus Persson spent $70 million on a Beverly Hills spec mega-mansion after his game was acquired by Microsoft for $2.5 billion. Five years ago, these sales would’ve been attached to Hollywood A-listers. Today, it’s bold-faced names from the business pages: Jeff Bezos ($24.5 million for his Beverly Hills compound), Google’s Eric Schmidt ($22 million for Gregory Peck’s old estate) and Gateway co-founder Ted Waitt ($10.3 million on a Beverly Hills home), to name just three. While the most aggressive purchases were made between 2013 to 2014, Silicon Beach continues to spur luxury demand in the city. Local agents are starting to notice certain trends. “Buyers from the tech world...don’t want to do extensive work on a property,” said Greg Harris, estate director at luxury firm Compass. “They don’t have the interest or bandwidth for that.” Harris also noted that they’re especially interested in properties in walking and biking proximity to their jobs. 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.” The tech scene still isn’t the biggest driver of Los Angeles’ residential real estate boom — for that, you’d still have to blame the entertainment industry and foreign buyers — but it has added a new element to a local market that is both profitable and unpredictable.

On the market in Silicon Beach

Pacific Sotheby's International Realty

PRICE: $3.599 million

BEDROOMS: 3

BATHROOMS: 3.5 Venice is no longer a realm of scrappy bungalows and scruffy surfers. Modernism has come to town, and this Robert Thibodeau-designed three-bedroom is the perfect example of this new trend. View this listing

Engel & Volkers Santa Monica

PRICE: $17.8 million

BEDROOMS: 5

BATHROOMS: 6 Tucked away on Santa Monica's west side, this "architectural masterpiece" by Peter Choate offers the best of all worlds: views, privacy and a short ride to the beach. View this listing

Coldwell Banker - Malibu West

PRICE: $5.25 million

BEDROOMS: 4

BATHROOMS: 5 In case there's any doubt that New York aesthetics have reached the west coast, step into this 4,800-square-foot, loft-inspired four-bedroom. The first floor features 17-foot ceilings. View this listing

Coldwell Banker Residential Brokerage

PRICE: $22.5 million

BEDROOMS: 7

BATHROOMS: 6.5 Fans of English country estates will find quick comfort at this Santa Monica rarity, sitting on more than one acre and reached via a long private drive. View this listing

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