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Silicon Beach property will be in high demand and continue to be alluring for many reasons as high tech jobs, diversity, mild climate, and better affordability are offered when compared to Silicon Valley's expensive cost of living. Looks like the highly compensated high techies will be here to stay for the long haul. The lifestyle of the Southern California coast is priceless and the ultimate driving force for those that want to live here.
Why Silicon Beach will still lure tech talent despite skyrocketing prices
Over
the last two years, Venice has become one of the priciest neighborhoods
in all of Los Angeles, thanks in part to the success of companies
headquartered there like Snap.
The
new season of HBO’s “Silicon Valley” premieres this month, but the Bay
Area tech scene depicted on that show is no longer the only game in town
for America’s tech elite.
Los Angeles has its own tech hub, dubbed Silicon Beach, a four-mile stretch of beachfront that encompasses Venice and Santa Monica and is home to Snapchat’s parent company, Snap (SNAP).
While
Silicon Beach real-estate prices may be climbing, especially after
Snap’s IPO, there are reasons to believe the technorati will continue to
move there in droves. For one thing, Los Angeles still costs less than
the Bay Area — at least for now. Silicon Beach also arguably provides a
more diverse talent pool and isn’t as wrapped up in the tech bubble as
Silicon Valley.
“I
knew the next thing I was going to build was going to be
consumer-focused, and I wanted to get out of the San Francisco echo
chamber and be surrounded with lots of different types of creative
people and just be in a more mainstream place to build this company,”
Joe Fernandez, a serial entrepreneur based in Silicon Beach, told Yahoo
Finance.
Fernandez
added: “I think it’s really easy to get caught up in San Francisco with
what every other tech company is up to. You kind of fall into this trap
of only building for early adopters. But I really wanted to build
something that ‘normal people,’ with no specific interest in tech, would
hopefully find value in.”
Skyrocketing real-estate and deep-pocketed techies
According to real estate web site Trulia,
the median value of a home in Venice, for instance, where Snap is
headquartered, is $1,010 per square foot in 2016 — up sharply from $718
per square foot a decade ago. That’s cheaper than San Francisco, where
homes in many desirable neighborhoods easily fetch between $1,100 and $1,300 per square foot. Still, locals have been feeling the pain of rising real estate prices in Silicon Beach and have protested Snapchat’s presence.
Chalk that up to companies like Snap, Google (GOOG, GOOGL), Facebook (FB), and Yahoo (YHOO)
which have opened or moved some of their offices to the Silicon Beach
area, which stretches from Santa Monica to the south of Venice. Other
neighborhoods in Silicon Beach such as Santa Monica, Playa Vista and Mar
Vista are significantly cheaper — but also quickly inching upwards year
after year, thanks in large part to the influx of wealthy tech workers.
The
average tech worker in their mid-20s to early 30s is willing to shell
out between $2 million and $3 million on average — sometimes paid
upfront in cash — on a new place close to their employer, according to
Lee Johnson, a local realtor for Sotheby’s International Realty. Snap billionaire co-founder and CTO Bobby Murphy, for instance, purchased a new $2.1 million home in Venice, Calif., just 11 blocks from Snap’s headquarters.
“I
don’t see the young techies wanting to drive anymore,” says Johnson,
who has helped employees from Snap, Google and several startups find
homes. “These young tech kids want to ride their bikes and skateboards
to the office and not have to deal with leaving their own community.”
‘I can’t imagine actually starting a company now in San Francisco’
Despite
the increase in costs, advocates like Fernandez, the serial
entrepreneur, contend the LA tech scene has much to offer versus Silicon
Valley, its larger, even pricier sibling. Fernandez, who sold the
social media scoring startup Klout for $200 million in 2014, moved from San Francisco to Los Angeles a year later to launch his new venture Joymode.
The startup rents out different kits of equipment
for experiences like “Backyard Movie Night” or “Let’s Go Camping,” for
instance. Recruiting and retaining talent, a headache for many Bay Area
tech companies, is somewhat less of a challenge in Los Angeles,
according to Fernandez. Moreover, he says the pool of employees he can
hire from is more diverse, hailing from other industries like
entertainment, which has long been the city’s dominant industry.
“There
are a million different kinds of reasons why Joymode can fail,”
Fernandez acknowledged. “That’s kind of the default outcome for any
startup. Access to talent won’t be one of them. I feel like if I wanted
to hire 50 more people here, I could hire 50 more people here.”
Fernandez may not be hurting for money, but he has also found his dollar goes further in LA versus San Francisco.
“The
amount we made in profit on our SF home almost paid for our LA home,”
he said. “Our LA home, including the lot it’s on, is probably four to
six times bigger.”
Even
better, he argued that because LA remains more affordable, at least for
now, entrepreneurs like him have more financial runway to pursue their
next big idea.
“San
Francisco has all the so-called ‘water’ in the world, but everyone is
still ‘thirsty,’” he added. “I can’t imagine actually starting a company
now in San Francisco. There’s this entitlement people have and the
timelines you have to deal with. There, you literally have one year with
employees to make it or not financially. But here, I have longer.”
Could Silicon Beach lose its lustre?
How
much longer tech workers like Fernandez have may also depend on just
how large LA’s tech scene becomes. Some local Venice residents are
already protesting
the gentrification of their neighborhood. And several mid-level tech
workers Yahoo Finance spoke to expressed concern their six-figure
salaries may be enough to snag them a new, spacious apartment or home
now but won’t be enough in the coming years, the way prices are
climbing. In which case, they may — god forbid — be forced to move to cheaper areas like downtown Los Angeles or West Hollywood.
“My concern regarding prices would be only if we have another tech bubble pop,” added Johnson.
Another big tech bubble? Doubtful. Like it or not, it seems those highly paid techies are here to stay.
Source: http://finance.yahoo.com/news/silicon-beach-will-still-lure-tech-talent-despite-skyrocketing-prices-165109286.html;_ylt=A0SO8y6Eru5YC0cAaUVXNyoA;_ylu=X3oDMTEydjRqaXQwBGNvbG8DZ3ExBHBvcwMxBHZ0aWQDQjM2OTRfMQRzZWMDc2M-
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