Marina del Rey rent prices are going through the roof

By Gary Walker and Joe Piasecki

(Source: Apartment List)

Over the course of two decades on the L.A. County Board of Supervisors, Don Knabe would often refer to Marina del Rey as “the crown jewel” of Los Angeles County. If rental prices continue their sharp upward trend, it may soon require a king’s ransom to live here.

Median monthly rent for one- and two-bedroom apartments in Marina del Rey jumped up more than 16% between October 2014 and October 2017, according to research by housing economists with the online rental listing aggregator Apartment List.

In October 2014, the median monthly rent for a one-bedroom apartment in the marina was $3,089 (up from $2,895 in January of that year). Last month it clocked in at $3,587.

Meanwhile, median two-bedroom rents rose from $3,969 in October 2014 to $4,609 last month.

With a proliferation of high-paying jobs in the Westside’s burgeoning technology sector and increased competition from tourist spending on short-term vacation rentals, experts say Marina del Rey’s supply of rental housing just can’t keep up with a feverish level of demand.

During a “State of the Marina” address in May 2014, Knabe (who termed out of office last November) told an LAX Coastal Chamber of Commerce audience that it was past time for the county to modernize the marina and make it more attractive to the digital workforce flourishing in nearby Venice, Santa Monica and Playa Vista.

“Many of you have been reading about the new Silicon Beach [tech sector] that we have around here, and we need to be competitors for that marketplace and have the kinds of amenities and living experiences and businesses that will attract people to come here,” he said.

So far, that effort has been pretty successful, according to Marina City Realty owner Charles Lederman.

“In general, I think the influx of Silicon Beach companies coming to the Westside has had an effect,” said Lederman of rising rental prices in the marina. Affluent renters wanting to live close to where they work “seems to be the trend,” he added.

Peter Bergman, president of Bergman Beach Properties in Marina del Rey, said short-term rentals brokered through home-sharing sites like Airbnb are also having an impact on the market.

“We’ve seen home prices go up because of Airbnb, which has increased the demand for rentals. People who come to the marina or Venice and want to rent want to be by the beach,” Bergman said. “We’re seeing many duplexes in places like Marina Pointe used as Airbnb rentals by homeowners because the revenue is much greater if you have a short-term tenant instead of a long term-tenant. … So that has a direct impact on the rental market in Marina del Rey.”

 

SHIFTING DEMOGRAPHICS

Despite soaring rents, data analysis by the USC Price Center for Social Innovation suggests that Marina del Rey residents — at least those who’ve been moving in over the past three years — can afford to pay them.

Comparing U.S. Census Bureau American Community Survey estimates of rental prices and occupant earnings from 2010
to 2015, the percentage of “rent-burdened” Marina del Rey residents — those whose rent bill cost more than 30% of their income — actually decreased as rental costs increased.

In 2010, when the overall median rental price in the marina was $1,977, slightly more than 48% of tenants were rent-burdened.

In 2015, when the median rental price shot up to $2,411, the share of rent-burdened tenants had dropped to 45.8%.

Venice community activist Nick Antonicello, who works in sales for luxury real estate firms and brands, sees the Westside’s red-hot housing market pushing lower-income tenants out of high-demand areas, replacing them with higher wage earners — which may account for the decreasing share of rent-burdened tenants in the marina.

“There’s no question the demographic of the marina is trending so that a person has to make six figures in order to live there. There’s less rental stock, and the people living here are much more affluent. So, yeah, people are probably leaving because of the rents,” Antonicello said.

 

MORE EXPENSIVE THAN VENICE

It’s no secret that rent prices are going up all over the Westside, but even those who follow the news closely may be surprised that median rents in Marina del Rey are actually higher than in Venice, despite the hype generated by clickbait headlines suggesting otherwise.

Until recently, Apartment List calculated its widely publicized median rent reports based primarily on apartmentlist.com listings, which was biasing the data toward luxury housing stock and thus overstating median rental prices, explained Apartment List housing economist Chris Salviati. Earlier this year, Apartment List began using more fully representative base estimates calculated from American Community Survey estimates as a control, then extrapolating rental increases based on month-to-month price comparisons of similar units advertised at apartmentlist.com.

“Our new estimates tend to be lower than what some of our competitors publish, but we feel that our estimates best reflect the full market,” Salviati said.

In other words, most people weren’t paying in excess of $5,000 a month to lease a two-bedroom apartment in Venice in August 2016, as Apartment List data had suggested at the time. Under the new formula, the estimated median rent for a two-bedroom unit last fall moved closer to $2,200 — compared to about $4,300 at the time in Marina del Rey.

 

1,100 NEW UNITS IN THE PIPELINE

The supply side of the Marina del Rey rental price equation is difficult to pin down.

As of late September, L.A. County planning officials counted 6,037 existing rental units in Marina del Rey, with another 1,111 rental units projected for development or already under construction.

It wasn’t immediately clear how many rental units existed in the marina while rental prices shot up drastically from early 2014 to late 2015, but new construction tends to replace more affordable older units with pricier new units — despite increasing density expanding the overall housing supply.

In 2011, the 202-unit Del Rey Shores apartment complex built in 1964 at Via Marina and Panay Way was demolished to make way for a small village of high-end contemporary housing. Its replacement, the big blue buildings now known as Shores, brought 544 new rental units to the market in 2013. According to county reports, the marina added 688 rental units overall in 2013, with 54 of them set aside as affordable housing below market rate (all of them at Shores).

In August 2016, the Neptune Marina’s 136 aging townhomes — where monthly rent for two-bedroom units topped out at around $2,600 vs. Apartment List’s estimated median rent of $4,380 — were demolished to make way for a new 526-unit complex.

Historically, the market and pretty much the market alone has determined rental prices in Marina del Rey. The unincorporated community is not subject to the same rent stabilization policies as the Los Angeles neighborhoods it borders, and the housing stock basically functions as a revenue generator for county coffers. (L.A. County owns the land and leases it to developers, who in turn set rental prices.)

 

A SECOND LOOK AT AFFORDABLE HOUSING

Against the backdrop of soaring rents, county lawmakers will soon be considering an overhaul of Marina del Rey’s affordable housing policy, or lack thereof.

Los Angeles County Supervisor Janice Hahn, who replaced Knabe in the district that includes Marina del Rey, wants future development in the marina
to be more inclusive of affordable housing.

“I strongly support the development of housing that people can afford,” said Hahn. “As we go forward with [new] developments in Marina del Rey, all will include some affordable units.”

But Knabe cautions that it’s unlikely the marina could support enough rental units to keep pace with demand from across the income spectrum.

Only a few years ago, he and his staff members saw an imperative to address the wave of high-earners cresting west of the 405 with competitively attractive housing that would sustain the marina’s role as a major revenue generator for the county.

“Marina del Rey’s always been an attractive area to visit and to live. But there’s a limit to what they can do out there regarding building more housing, because it’s county-owned land and the supply has not met the demand,” Knabe said. “There were always issues about supply because it’s always been a high-demand area, so it stays on the higher side of the rental scale.”

Salviati’s prediction: Rental prices will keep going up in Marina del Rey.

“There’s no real indication of that trend reversing,” he said, “and so I would expect the area to continue experiencing above-average rent growth over the next few years.”

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