Silicon Valley has been known to be the home of Google, Apple, innovation, digital prodigies and sky-high real estate prices. There are, however, a growing number of areas around the world that are making their marks as tech hubs.
Thanks to a special series in Mansion Global, we’re now able to take a look at these new, coming-of-age tech hubs that are giving their respective housing markets huge shots in the arm. Internationally, these cities include Tel Aviv, a city with 6,600 tech firms and a population of just 9M people; Shenzhen China, a city that spawned 3,000 new tech companies in the last year alone; Lisbon; Portugal; and Ottawa, a city we covered here just two weeks ago.
Here in the States, Los Angeles and Pittsburgh are seeing an influx of tech companies. Neighborhoods within those two cities are experiencing jolts to their respective housing markets.
In Part 1 of “Tech Hubs Giving Real Estate a Boost,” we’ll take a look what’s happening in real estate in Los Angeles neighborhoods where the likes of SnapChat, Google, Netflix, HBP, Apple and Amazon have moved in.
Deceleration has been the name of the game for greater Los Angeles real estate, according to a Q1 2019 market report by Douglas Elliman Realty. This report indicates that, after a seven-year-run-up beginning in 2012 to a double-digit price growth, median sales prices in greater Los Angeles are down -4.5% to $1,455,000. Additionally, sales volume is down and inventory is up.
However, in specific regions of Los Angeles that have a “healthy” tech company presence, real estate markets are strong. Those regions or neighborhoods are Westside beach and inland communities in between Malibu and Los Angeles International Airport. These communities include Santa Monica, Venice, Marina del Rey, Playa del Rey, Culver City, El Segundo and Mar Vista. Together, these communities are known as Silicon Beach.
Erin Kennelly, the executive director of research with the luxury brokerage The Agency in Los Angeles, said, “What we’re seeing is that Silicon Beach neighborhoods have among the lowest inventories and the best performances over the past year.”
Some of these neighborhoods are price-wise and design-wise completely different than they were just 10 years ago. For example, Venice now has many more multi-million dollar homes. Playa Vista now has many more multi-family dwellings, condominiums and town homes that feature low maintenance, lock and leave, open floor plans, en-suite bathroom with most bedrooms, and amenities outside-your-door life styles. And, as some get priced out of Silicon Beach communities, the tech influence on price is moving east to Echo Park and Silver Lake.
Silver Lake, just 5 miles from the Art District and less than 4 miles from Hollywood where Netflix just expanded its footprint to +1M square feet of space in the next year and a half, is “…the hottest neighborhood in Los Angeles,” according to Kennelly. Inventory stands at 3.3 months; prices have increased +21% to $1.28M compared to one year ago; days on the market currently stand at 16; and homes typically sell for +4% over the listing price.
Paul Habibi, a professor at the Zinman Center for Real Estate at UCLA, said, “If real estate was strong before the tech sector came to Silicon Beach, I think it’s made it increasingly so, particularly in the $1M – $3M sector of the market.”
Just take a look at inventory comparisons between greater Los Angeles and Silicon Beach communities:
- Greater Los Angeles – 5.2 months
- Venice – 3.8 months
- Santa Monica – 3 months
- Palms and Mar Vista – 1.4 months
And take a look at sales price comparisons from one year ago:
- Greater Los Angeles – +1%
- Venice – +8% to $2,481,000
- Santa Monica – +9% to $2,529,000
- Culver City – +11% from one year ago and selling +2% over list prices