More tech industry buyers are snapping up L.A. real estate
Excerpt from the LA Times, By Andrea Chang, March 20, 2015:
Tech moguls looking to buy a trophy home have long turned to Southern California.
Billionaire Larry Ellison has become almost legendary for purchasing prized beachfront Malibu properties. Amazon.com's Jeff Bezos spent $24.5 million for a Beverly Hills compound. Sean Parker, of Napster and Facebook fame, dropped $55 million last year to buy Ellen DeGeneres' Holmby Hills mansion.
They were all upstaged in December when "Minecraft" creator Markus Persson, a Swedish tech billionaire, forked over $70 million for an epic custom mansion in Beverly Hills. It's fitted with iPad-controlled fountains, vodka and tequila bars, a $200,000 candy room and an onyx dining table for 24.
But L.A.'s appeal among techies is spreading beyond the mega-rich, with tech industry buyers from Silicon Valley spending more and more time in the Southland — and snapping up real estate here. They include Facebook and EBay executives as well as angel investors and start-up entrepreneurs.
"We've seen an uptick in buyers from the technology industry over the last several years — some moving to Los Angeles and some buying second homes here, as a kind of peaceful retreat," said Charles Black, executive vice president of marketing and strategic development at Hilton & Hyland, the listing agent in the Persson sale.
Those who have put down roots in L.A. cite a mix of personal, financial and work-related reasons: Compared with the Bay Area, the weather is warmer and the lifestyle more laid-back. With San Francisco home prices at staggering highs, SoCal means more space for less money.
And with a growing tech scene, plus the lure of tech-entertainment content partnerships in Hollywood, there's more business to do in L.A. In 2014 the Los Angeles-Long Beach region broke into the top five metropolitan areas by venture capital investment for the first time, with 171 deals totaling $2.05 billion, according to the National Venture Capital Assn., whose records go back to 1995.
Last year, the number of Westside homes purchased by buyers who listed a mailing address in Santa Clara County, San Francisco County or San Mateo County more than doubled from the year before, hitting the highest number since 2007, according to data provided by CoreLogic DataQuick. The firm looked at home sales in Santa Monica, Venice, West L.A., Brentwood, Westwood, Playa Vista and Beverly Hills, areas that are close to or considered the nexus of the L.A. tech community.
Andrew LePage, an analyst with the housing data service, noted that the figures could actually be higher because some wealthy buyers purchase homes using the addresses of a business or other entity that can be located anywhere, and some might have used the new L.A. address as their mailing address.
Although he primarily lives in San Francisco, entrepreneur and investor Justin Yoshimura focused on Southern California when it came time to buy property, with the aim of making it his home away from home.
In December, he paid $2.04 million for a three-bedroom, three-bathroom home in Santa Monica for $250,000 below listing. Every few days, the 25-year-old flies north for the workweek, returning to Santa Monica on weekends.
"Compared to San Francisco in particular, it's very cheap," said Yoshimura, who founded and later sold a loyalty platform for retailers called 500friends. "Santa Monica is one of the most desirable neighborhoods in L.A. and I have a yard with a pool and a beautiful home for less than what I would pay for an equivalent-sized condo in San Francisco."
The willingness to buy property in L.A. marks a significant shift in the way many techies view the city.
"I used to live in Palo Alto, and when I told my friends that I was moving to L.A., they all thought I was crazy," Tesla Motors and SpaceX founder Elon Musk told The Times in a 2012 interview. "They view Southern California as being a little vacuous."
Similarly, prolific start-up investor David Lee stunned Silicon Valley two years ago when he moved from Palo Alto to Westwood.
His reasons were mainly personal: His wife, who is also in tech, grew up in Southern California and they wanted their daughters to be close to their extended family in the area. Lee quickly made it clear that he would continue as a tech investor and commute regularly to his firm, SV Angel, up north.
Despite several investments in L.A. companies, Silicon Valley remains the indisputable tech capital of the world, Lee said. So every week, he takes a Southwest Airlines flight to the Bay Area on Tuesday morning, returning either Thursday night or Friday morning.
"With Uber, Uber X, Lyft, TSA Pre, wireless on the planes, all the different options — it's been very easy, the transition," he said.
The hope is that those cross-state flights will become fewer as L.A.'s tech ecosystem becomes more robust and opportunities increase in Southern California.
"I wish that I didn't have to go to San Francisco," Yoshimura said. But "I have 15 angel and seed investments and most of them are in San Francisco. I really want the L.A. ecosystem from a financing perspective and from an entrepreneurship perspective to grow so that one day I could live in Santa Monica full-time."