Since the dawn of time, city boosters have always advertised their urban home as the next big thing – the next great port, railroad hub, steel town, etc. Recently, we’ve seen a growing battle to determine who is going to be the “next Silicon Valley.” New York had their “Silicon Alley” bubble before the dotcom crash at the turn of the century, and now you have cities as wide-ranging as Chicago, Austin, Atlanta, and Bozeman claiming that they are the new tech and startup hub. The diffuse nature of tech makes all of these claims possible, but the one city that can really call itself that, and reap the real estate benefits that come with such a title, is none other than Los Angeles. Investors in California real estate need to know what this means and how it can benefit them.
The Rise of Silicon Beach
It might seem odd to say that LA is a “new” tech hub – from aerospace to processors, LA has always been a major center of technology. It is, after all, one of the birthplaces of the Internet, growing out of California universities in the 1960s for the Department of Defense. But there was always something a little, well, square about the LA tech scene. It was very staid and manufacturing-based. Don’t get us wrong – it changed the world and we wouldn’t have the tech we have today without it. It wasn’t of the information age, however. It seemed to be a home for huge companies and government contracts. The Bay Area, by contrast, had a hip, insurgent vibe, even as its companies devoured the world.
Well, now that vibe is spreading south. San Francisco real estate prices have begun to push more and more people out of the area, and those people are moving increasingly further south. Companies are realizing that the LA market has a lot to offer in terms of more affordable rentals, both for their offices and for their employees. Startups are beginning to thrive in the region – the prestigious online tech magazine Re/Code even declared last month that the LA tech scene was “having a moment.”
For now, this moment is centered on the Playa Vista neighborhood, a Westside area that is perfectly located with access to the highway, to the airport, and (maybe most importantly) to the beach. Offices and tech campuses are opening up in the surprisingly undeveloped area for major players like Microsoft, YouTube, Google, Yahoo, and Facebook.
What This Means for Real Estate
A neighborhood like Playa Vista, which wasn’t very built up before, is the perfect real estate incubator when such a thriving and very specific sector moves in. Rent in the area is poised to go up, making it a great place to purchase a building for fix-and-rent. The “fix” is the key, though. Young people who work in a dominating industry tend to expect a certain standard of living.
These standards also apply to their houses. Right now, the high-priced houses are being snapped up by CEOs, but other housing and condo units will trickle down to the lower, but still lucrative, levels. These tech execs and programmers expect their homes to be smart, with all the latest connectivity and technology, to be sustainable with smart appliances, and (preferably) to be solar, a technology that has gotten much less expensive to install. Obtaining a hard money loan from a trusted lender can help you make these renovations on your fix-and-flip property.
As the neighborhood changes, expect to see more of a demand for mixed-use properties around a central hub. LA has a reputation for sprawl and decentralization, which is mostly unfair, as it ignores the many neighborhoods that have developed there. But it is true that there isn’t yet a long-standing tradition of mixed-use hubs, where office, residential, retail, and pleasure meet. Tech workers won’t be eager to trek around the traffic-congested city to work and play. For developers and investors with big dreams, getting into mixed-use and using a hard money loan for development could be a great way to ride this wave to the top.
How a Hard Money Loan From Socotra Can Help You Program Your Future
One problem that some tech companies have is that they spend so much money developing their programs that they have to skimp on testing, and then when the product hits the market, there are tons of bugs. It’s the same thing for some real estate investors and fix-and-flip pros: they spend on purchasing the property and then find themselves ineligible for a loan to improve the property they bought. Hard money loans are equity-based, so that doesn’t happen. You are judged on the project and your property, not an unreflective or unfair credit score.
Socotra Capital is a leading California hard money lender and we know what it takes for you to thrive in the California real estate market. We can get you fast approval on your loan so you can get to work revitalizing Playa Vista and other tech-savvy neighborhoods.
California is a city that is always changing, always reinventing itself, and always finding new ways to succeed. The birth of our modern tech is now attracting the next generation of innovators, and the real estate market will react accordingly. A hard money loan from Socotra can help you be a part of that.