Silicon Beach real estate rides Snap Inc’s wave
Excerpt from the Financial Times:
At its stock market debut earlier this month, shares of Snap Inc surged 44 per cent as investors sought a piece of the growing social network. The stellar initial public offering made paper billionaires of its 20-something founders and pushed Snapchat’s parent above a $28bn valuation — about two-and-a-half times the size of its social media rival Twitter.
Yet traders at the New York Stock Exchange were not the only ones following the market. About 3,000 miles away in Los Angeles’s Silicon Beach community, where Snap is based, estate agents were also paying attention.
“It’s no secret that if the company’s stock did well, there’s a good chance it will boost the property market,” says Solo Scott, a broker with Re/Max Estate Properties in Marina Del Rey.
The seaside town is one of several communities along the LA coast that make up Silicon Beach, home to the city’s growing tech start-up industry. “Real estate is always one of the first things tech guys buy when they come into money,” he says.
Anchored by the popular beach communities of Venice and Santa Monica, Silicon Beach covers a roughly four-mile coastal area that stretches south to Playa Vista. Its culture is distinct from Silicon Valley near San Francisco. More hip and artsy than geeky, the proximity to Hollywood and the ocean give the area a more fashionable vibe, where celebrity pool parties can outnumber board meetings.
Technology companies have already spawned a real estate boom in Silicon Beach over the past few years, yet brokers are bracing for an influx of fresh cash as Snap’s early Wall Street success leads to a new wave of overnight tech millionaires.
The flow of money arrives at a time when Silicon Beach is already seeing sharply rising home prices.
The median price of a new home in the areas that make up Silicon Beach reached $1.88m in the fourth quarter of 2016, a 30 per cent rise from the same period in 2015, according to CoreLogic, a real estate data and analytics company. The median price paid for a new home rose 169 per cent between the fourth quarter of 2013 and the fourth quarter of 2016, the company says.
Initially populated by smaller tech start-ups wishing to escape high rents and competition in the San Francisco Bay area, Silicon Beach has grown rapidly. It is now home to more than 700 tech companies, including offices of Facebook, Google and Microsoft.