LA is a growing tech hub. But not everyone may fit. (2022)

LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.

But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.

According to the most recent Regional Housing Needs Assessment, from 2020, which determines how much housing must be built between 2021 and 2029, Los Angeles needs to construct more than 456,000 units of housing, or around 57,000 per year, to keep up with demand. But the city is anticipated to build just short of 231,000 in that period, or around 29,000 per year. And the flood of new tech workers is only exacerbating the problem.

Tech’s unique problem

The average tech salary in Los Angeles ranges from $114,000 for marketing and design positions to more than $148,000 for developers and engineers. This beats out the median annual household income in LA county, which is just over $71,000, according to the U.S. Census Bureau.

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High salaries put tech workers at an advantage in both the renting and buying markets, but it’s major liquidity events, such as a company being acquired or going public, that allow people to put down massive down payments or all-cash offers that really give them an edge, said Matt Canzoneri, CEO and co-founder of home-buying platform DwellWell. “They’re not relying on their high paychecks,” Canzoneri said. “They all of a sudden come into a windfall of cash that shakes up the market.”

Developers are more likely to build and price rental units and homes for purchase at rates that people in tech can afford, but are out of others’ budget.

The city’s IPO activity really started picking up in 2021, when companies including Dave and Rivian went public. According to data from PitchBook, the region saw 18 tech IPOs in 2021. That’s more than double the number of IPOs it had in 2020, when seven companies IPO’d, and more than triple the number of tech IPOs in 2019, when five tech companies went public.

LA has also seen a lot of M&A activity in the last few years, PitchBook data shows. In 2021, 434 tech deals took place in the region, worth an average of $377.6 million. That’s up from 284 deals in 2020 worth an average of $246.2 million.

Developers are more likely to build and price rental units and homes for purchase at rates that people in tech can afford, but are out of others' budget. And with the sheer lack of housing units overall, people who don’t make enough money are getting pushed out of certain areas.

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According to apartment rental platform RentCafe, the average apartment for rent in Santa Monica costs $3,958, with 95% of the apartments in the area costing more than $2,000 per month. Meanwhile, the average home value is more than $1.9 million, according to Zillow. In Los Angeles overall, the average rent is $2,734, with 74% of the apartments costing more than $2,000 per month. Houses cost $972,828 on average.

Tech’s unique solutions

Though tech aggravates the housing problem, tech may also provide unconventional solutions: Construction tech companies can create additional housing at a much faster pace than traditional development projects. “We have to look at clever ways of innovating and building our way out of the supply deficit, and one of the ways that we can do that is to limit the time and cost of constructing a home,” said Aisling Carlson, a local startup founder. “Technology can play a key role in adding value there.”

Modal Living, which builds prefab “accessory dwelling units,” sees a heavy concentration of business in Southern California, according to CEO Colin Jube. Adding another unit to a backyard offers “a really good solution for places like LA that have a lot of single-family neighborhoods,” Jube said. California offers a reimbursement of up to $40,000 for households that build an additional unit on their property.

“If you take any average single-family neighborhood in LA or anywhere, there’s really no way to get new, affordable housing into that neighborhood,” Jube said. “It’s built out, and typically zoning will not allow for apartment buildings or other types of housing types. So ADUs are a great way … to add housing density.”

Adding another unit to a backyard offers “a really good solution for places like LA that have a lot of single-family neighborhoods.”

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And ADUs aren’t the only things that can be prefabricated. Some companies are building entire homes before they hit a plot of land, often at a much quicker rate than traditional construction. In a city where the construction of new units of housing is slow going, prefabricated housing can be a fix, said Steve Glenn, CEO of Plant Prefab. This kind of building “can make the construction process more efficient from a labor standpoint, from a productivity standpoint, and from a time standpoint, to make it less costly to actually build.”

Though construction tech like this sounds exciting in theory, these solutions must go hand-in-hand with something less cool: Los Angeles zoning laws. “There are way more people that need housing than housing exists,” Jube said. “At its core, that’s really a zoning issue. LA in particular … has a disproportionate amount of single-family zoning.”

The underlying issue

A study released in March by UC Berkeley’s Othering and Belonging Institute found that 78% of residential land in the greater Los Angeles area is zoned for single-family housing.

This means there’s fewer housing units per square mile. From there, it’s basic economics of supply and demand: If construction isn’t keeping up with the increasing demand for housing, prices go up and inevitably get too expensive for the people who’ve lived in the city their whole lives.

For reference: In the Bay Area, which is also feeling a housing crunch, 85% of all residential land is zoned for single-family-only dwellings.

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“There’s a housing crisis everywhere. But it’s particularly bad in those two cities, and both of those cities suffer from some of the same issues,” Jube said. “Developers that would otherwise be happy to build higher-density projects simply aren’t allowed to because of zoning.”

LA is a growing tech hub. But not everyone may fit. (1) More than three-quarters of residential land in the greater Los Angeles area is zoned for single-family housing, but the city and the state are working to make room for more housing units and to rezone.Photo: Nat Rubio-Licht/Protocol

And often, tech’s decision makers are all in on this kind of zoning, with the posh Bay Area town of Atherton being a prime example. Tech executives from Netflix, Google, Electronic Arts, and others wrote strongly worded notes to the city council after it proposed legalizing the construction of multifamily properties. Billionaire tech investor Marc Andreessen wrote to the council that apartment buildings would “MASSIVELY decrease our home values” and “IMMENSELY increase the noise pollution and traffic.”

But it’s not all doom and gloom. LA and the state are working on a number of solutions, including the recently approved LA Housing Element, which requires the city to rezone to make room for a minimum of 255,000 units of housing and could rezone for up to 1.4 million, LA city planner Matthew Glesne told Protocol. Two bills also received support from state legislators in late August that boost home-building by allowing developers to construct housing units on commercial land.

But the city has a long way to go. “We have the second fewest homes per adult of major cities in the country,” Glesne said. “Certainly the lowest income among us pay the price for that.”

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Protocol data researcher AJ Caughey assisted with reporting on this story.

FAQs

Is Los Angeles a tech hub? ›

LA's tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators.

Is California a IT hub? ›

Silicon Valley also accounts for one-third of all of the venture capital investment in the United States, which has helped it to become a leading hub and startup ecosystem for high-tech innovation.

Is Chicago a tech hub? ›

Chicago and Atlanta aren't widely viewed as “traditional” tech hubs on the level of Silicon Valley or New York City, but both cities are enjoying a lot of tech-hiring momentum right now.

Is LA good for technology? ›

Los Angeles has a flourishing tech hub.

Los Angeles is the 6th best IT city worldwide—with a stable economy and a flourishing hub of innovative companies. As a growing community for tech employment, LA has transformed itself into a new tech hub worth $155 billion, also known as Silicon Beach.

What makes a city a tech hub? ›

According to Seneca One, a tech hub is a “community that promotes innovation for technology-based companies”. It's a place where technology talent, investors, educators, and companies can thrive, contributing to a larger tech ecosystem that creates solutions for everyday problems with technology.

Why is California good for tech? ›

California's ability to lead the world in innovation and industry is, in part, due to a commitment to technology. From robust infrastructure that enables remote work to a rich network of technology providers, businesses and individuals alike can thrive, unlike many other places worldwide.

Which city is IT hub in USA? ›

New York City has a booming tech industry and is easily one of the cities with the most tech jobs. This city of 8.8 million people offers high salaries and a diverse economy.

Where are the biggest tech hubs in the US? ›

The Top Tech Hubs in the U.S.

Silicon Valley, in California's Bay Area, remains the most prominent (and expensive) U.S. tech hub, with a talent pool of nearly 380,000 tech workers. Washington D.C.

What states are tech hubs? ›

The top metropolitan areas for tech positions include: New York City (19,933 jobs); Washington DC (16,985 jobs); Dallas (12,279 jobs); Chicago (10,941 jobs); and Los Angeles (10,848 jobs).

Is Santa Monica a tech hub? ›

The area known as "Silicon Beach" is a nod to Northern California's Silicon Valley (the original tech hub), and encompasses the following communities: Santa Monica, Venice, Marina del Rey, Playa Vista, Playa del Rey, El Segundo, Manhattan Beach and Hermosa Beach.

Is living in LA a good idea? ›

With a current population of almost 4 million people, Los Angeles is one of the best places to live in California. Prized for its cultural diversity, people from all over the country and the world are moving to Los Angeles with the hopes to make their dreams come true.

Is LA good for students? ›

The State of California is home to some of the best Universities in the nation but also worldwide. Specifically, the city of Angeles is home to the University of California Los Angeles, known also as UCLA, the University of Southern California or USC, and many others.

What good is LA known for? ›

Hollywood stars, the TV & movie industries, and gorgeous beaches all make LA a famous city and a popular vacation spot.

What makes a great tech hub? ›

Skills, education and community are the three key focus areas to work on as an industry and city. It's a competitive market and not every city can foster the best talent; only the most community-driven and cultivating will succeed.

What makes a good tech hub? ›

According to BT, a tech hub should create “an environment specifically targeted at helping young technology companies thrive by encouraging experimentation, not demonising failure, and helping firms network with other like-minded individuals and enterprises”.

Where are the biggest tech hubs in the world? ›

According to a survey conducted by KPMG executives, the top tech hubs around the globe include: Shanghai, China; New York, New York; Tokyo, Japan; Beijing, China; London, England; and Washington, D.C. The tech industry continues to shift, with economies and other factors influencing the growth (or decline) of venture ...

Is California the tech capital of the world? ›

Everyone has probably heard of the term “Silicon Valley”, but not everyone can show it on the map. Silicon Valley is located in the southern part of the San Francisco Bay Area, in northern California, the most cosmopolitan part of the Golden State.

Why do people prefer California? ›

It's free, simple and secure. Craving a new locale featuring plenty of sunshine, easy access to the ocean and delicious food? Moving to California might be for you. California is among the biggest states in the nation, both in terms of land size and population, so there is a huge range of great places to live.

Why living in California is worth it? ›

With beautiful beaches, pristine parks and hiking, gorgeous homes, a people-focused government, diverse culture, and population – the quality of living outweighs the costs for many Americans who enjoy living in CA.

Which city has best technology? ›

India's Top Tech Cities 5.6666666666667 out of 5 based on 3 ratings.
...
India's Top Tech Cities.
RanksCitiesTotal Score
1Bangalore66.2
2Hyderabad58.7
3Mumbai58.7
4Chennai58.6
16 more rows

What is the fastest-growing technology? ›

Some of the fastest-growing tech industries in the world in 2022 are revealed here, and they include FinTech (Financial Technology), Workplace Technologies, Cybersecurity, and Healthcare Technology. Additionally, Virtual Reality (VR), Cloud Computing, and Machine Learning are also rapidly growing tech industries.

What city in the US has the most technology? ›

1. California-Lexington Park, Maryland
PopulationHouseholds With a ComputerSTEM Jobs per 1,000 Jobs
110,67589.5%252.5
24 Jan 2020

Where is tech growing the fastest? ›

12 fastest growing US cities for IT talent
  • Houston. ...
  • San Antonio. ...
  • Portland, Ore. ...
  • Tampa, Fla. ...
  • Phoenix. ...
  • Charlotte, N.C. ...
  • Boston. Boston has grown to become a popular tech hub in recent years, with companies such as Amazon, Google, IBM, Microsoft, and Oracle opening offices in the city. ...
  • St. Louis.
28 Sept 2022

Which city has the most tech jobs? ›

Top 20 Tech Cities
CityIT Job Postings 2021
1Austin, TX64,481
2San Jose, CA98,315
3Dallas, TX156,358
4Atlanta, GA111,225
16 more rows
21 Mar 2022

What is the most high-tech state in America? ›

Most Innovative States
Overall Rank*StateInnovation Environment
1District of Columbia2
2Massachusetts1
3Washington4
4Maryland7
47 more rows
23 Mar 2022

What is the tech hub of the world? ›

The world's preeminent hub for technology, Silicon Valley is a byword for innovation. Today, it is home to the headquarters of many of the world's largest high-tech corporations, including more than thirty businesses in the Fortune 1000 as well as thousands of promising startups.

Which city is tech capital of world? ›

San Francisco, California

Since 2thinknow defines the region by its largest neighboring city, San Francisco takes the top spot. It is the undeniable epicenter of all things tech, from its gigantic startup culture to its venture capital scene to its population of designers and programmers.

What is the most used tech in the world? ›

According to recent data, mobile phones top the list of the most popular electronics, worldwide. In 2022, pretty much all (96.2%) consumers own a mobile phone. Of the different types of mobile phones, smartphones are the most popular. They're owned by 96% of global consumers.

What is the fastest growing tech city in America? ›

1 is Bend-Redmond, Oregon. Its fastest growing high-tech industry is management of companies and enterprises, which experienced 237.3% growth between 2015 and 2020. The No. 2 and No.
...
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61 more rows
21 Mar 2022

What are up and coming tech cities? ›

These cities offer some of the best wages for tech workers in the country.
...
We have determined these fastest-growing tech cities through an analysis of the Dice Tech Salary Report, 2022 Edition.
  1. Pittsburgh, Pennsylvania.
  2. Atlanta, Georgia. ...
  3. Chicago, Illinois. ...
  4. Miami, Florida. ...
  5. Seattle, Washington. ...
1 Jul 2022

What state is the best for tech? ›

Complete List of the Best States to Work in Tech
Georgia StateGeorgia1 Overall Rank132 Well-being Rank32
Virginia StateVirginia2 Overall Rank211 Well-being Rank11
Maryland StateMaryland3 Overall Rank34 Well-being Rank4
North Carolina StateNorth Carolina4 Overall Rank437 Well-being Rank37
StateOverall RankWell-being Rank
6 more rows
28 Apr 2022

Where do techies live in LA? ›

Silicon Beach is the Westside region of the Los Angeles metropolitan area that is home to more than 500 technology companies, including startups.

What happens in a tech hub? ›

A tech hub is a community that promotes innovation for technology-based companies. The collection of like-minded individuals working in various business sectors but focused on the use of technology creates a unique environment where individuals, ideas and the companies that support both can thrive.

Where do tech people live in LA? ›

Silicon Beach Tech Companies and Startups

Silicon Beach is at the heart of the LA tech and startup scene with more than 500 companies calling the area home.

Is there a tech scene in LA? ›

Silicon Beach is the Westside region of the Los Angeles metropolitan area that is home to more than 500 technology companies, including startups.

What is the tech hub of the US? ›

Silicon Valley, in California's Bay Area, remains the most prominent (and expensive) U.S. tech hub, with a talent pool of nearly 380,000 tech workers.

What is LA a hub for? ›

LAX serves as a hub for American Airlines, Delta Air Lines, Alaska Airlines, Polar Air Cargo and United Airlines. It is also a focus city for JetBlue, Allegiant Airlines and Southwest Airlines.

Is the UK a tech hub? ›

SHARE THIS POST: London is Europe's leading tech hub. Globally, it is only trumped by Silicon Valley. The city known for Big Ben, double-decker buses and breathtaking parks has seen its tech ecosystem flourish over the past decade.

Is LA good for tech startup? ›

On top of that, LA was ranked the fourth-best startup ecosystem in the world by StartupBlink's 2021 report, confirming the area's continuously growing power and reputation in the tech scene.

What city in America has the most technology? ›

1. California-Lexington Park, Maryland
PopulationHouseholds With a ComputerSTEM Jobs per 1,000 Jobs
110,67589.5%252.5
24 Jan 2020

What is the biggest airport in the US? ›

The biggest airports in the USA
  • Denver International Airport, Colorado – 135 square kilometres. ...
  • Dallas/Fort Worth International Airport, Texas – 69 square kilometres. ...
  • Orlando International Airport, Florida – 54 square kilometres. ...
  • Washington Dulles International Airport, Virginia – 52 square kilometres.
6 Oct 2022

Why is it called LAX? ›

Before the 1930s, airports had two-letter codes. When codes switched to three letters, many added the letter X to the end. LA (Los Angeles) became LAX.

Why do they call Compton The hub city? ›

Incorporated in 1888, Compton is located in the middle of L.A., thus it's nickname "Hub City." It's a multi-ethnic horse town where on any given day you'll spot plenty of urban cowboys and backyard stables in the Richland Farms area.

Which country is the tech hub of the world? ›

According to a survey conducted by KPMG executives, the top tech hubs around the globe include: Shanghai, China; New York, New York; Tokyo, Japan; Beijing, China; London, England; and Washington, D.C. The tech industry continues to shift, with economies and other factors influencing the growth (or decline) of venture ...

Which country is hub of technology? ›

Any list of technology hubs would be incomplete without mentioning the powerhouse that is the USA. While there is exceptional potential all over the world, places such as Silicon Valley in the US are home to over half of all Fortune 100 companies.

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