How Venice Became the Most Expensive Neighborhood in Los Angeles

Abbot Kinney is only a 10-minute walk from Venice Beach, but it somehow feels much farther. The ocean breeze doesn't reach that far. You can't hear the waves. Instead of the smell of the Pacific Ocean, inscrutable scents spill out of tiny, high-end boutiques.

So much is crammed into that half-mile stretch, running from Venice to Westminster, yet you'd be hard-pressed to find a swimsuit, much less a surfboard. You'll sooner find a $200 wool poncho than a $12 pair of flip-flops. You won't see Harry Parry, in his white turban, Rollerblades and bull's-eye Stratocaster; you're more likely to spot Tim Robbins riding his bicycle down the sidewalk, as I did one unseasonably hot winter's afternoon, dressed head to toe in black, including a black beanie, like a cat burglar.

The stores here have whimsical names such as Scotch and Soda (clothes), Chariots on Fire (jewelry and pottery and such), Huset (IKEA for rich people) and the Butcher's Daughter (juice and coffee but also wine and flowers and candles; one scent: basil honeysuckle and white grapefruit). Each one could be the name of a New Yorker short story or an indie rock band.

The smell of freshly made waffle cones from Salt & Straw dominates the intersection of Abbot Kinney and California. The ice cream shop boasts such flavors as avocado-and-strawberry sherbet, black olive brittle and goat cheese, and foie gras oatmeal-raisin cream pie.

And, of course, there are myriad coffee shops: Intelligentsia, Blue Bottle Coffee and Blue Star Donuts, which sells coffee along with maple bacon doughnuts and passion fruit cocoa nib donuts. Even Tom's Shoes sells coffee — more coffee, it would seem, than shoes.

"Many of the stores on Abbot Kinney are run as loss leaders," says Ira Koslow, a longtime Venice resident who's also president of the Venice Neighborhood Council. "It's become such a phenomenon to have Abbot Kinney on your letterhead or on your website. The stores don't have to make that much money. Your brand is getting that bump."

And then there is Abbot's Habit, where I walked in to find a girl paying with change she counted out carefully from a plastic Ziploc bag. The 1990s-era coffee shop is the last place in the vicinity where you can get a drip coffee for $2.25. At 24 years old, it's the longest-operating establishment on Abbot Kinney.

"The street is changing, obviously," says Nina Santangelo, the owner. "Every three years it changes."

When Intelligentsia opened its Abbot Kinney branch in 2009, Santangelo says, her business grew. "But now it's saturated. Tom's Shoes has a coffee shop.

"Which is fine. Down the street has a place with butter in their coffee. And then there's the one with nitro."

Locals used to come to Abbot's Habit, or they went to Hal's, which was forced to move up the street, to the less fashionable part of Abbot Kinney north of Westminster, after its property sold for a staggering $40 million.

"Every day another customer comes in and says they're moving," Santangelo says. "My employees all used to live in Venice. Now none of them do."

Santangelo, too, is planning an exit. Barring some last-minute reversal, she says, Abbot's Habit will close its doors in June.

"We're trying to stay ourselves, but the rent doesn't allow that," she says. "I live in Venice, but we never eat in Venice. You'd think you could walk down the street and get something to eat that doesn't cost $80."

Koslow agrees: "The stores have changed. It's sort of more for tourists than for locals. It is sad, in a way. But the residents are changing as well."

The line for ice cream outside Abbot Kinney’s Salt & Straw
The line for ice cream outside Abbot Kinney’s Salt & Straw
Ted Soqui

Over the course of just a couple of years, Venice has become one of the most expensive neighborhoods in Los Angeles. According to the real estate website Zillow, it is the seventh most expensive neighborhood in which to buy a house, its median home value — $1,578,200 — coming in just behind the Hollywood Hills and just ahead of Beverlywood. According to ApartmentList.com, the average rental price of a two-bedroom apartment in Venice is $4,900 a month — well ahead of Westwood, Santa Monica, Brentwood, even Bel-Air and the Hollywood Hills — bested only by the Pacific Palisades and Beverly Glen.

When you rank neighborhoods in the city of L.A. by price per square foot of real estate, Venice becomes even loftier: According to data provided to L.A. Weekly by Zillow, Venice is tied with Bel-Air for No. 2. Only the Pacific Palisades is more expensive per square foot.

As for median rental price per square foot, Venice is the most expensive place in L.A.

Venice has always been an odd mix, a low-rise neighborhood of tiny parcels, canals and slender walk streets. There's the boardwalk, but there's also Oakwood, nicknamed Ghost Town, which until recently was dominated by gang violence and open-air drug markets. It was never cheap. But when my parents moved there in the 1970s, it was affordable — as affordable as living by the beach got, at any rate.

But that has all changed. Venice is now more than just a beach town, more than just a tourist attraction. Venice is a brand. Or as Ernest, a man I met outside the Oakwood Community Center (he smoked a hand-rolled cigarette and declined to give me his last name), puts it: "This used to be a community. Now it's a business."

Solo Scott, a surfer-turned–real estate agent (a sort of human synecdoche for his hometown itself), recalls: "When I was a kid, Abbot Kinney was still a scary street. You wouldn't walk down there at night.

"The change for me was about four or five years ago. I was getting a cup of coffee at Intelligentsia, and I saw an old lady in her mid-70s, in the middle of the street stopping traffic, holding these big shopping bags. A well-heeled lady, with like a Louis Vuitton purse or something. It could've been Rodeo Drive. It could've been the Champs-Élysées.

"And I said, 'Holy shit, there goes the neighborhood.'"

So how did Venice become Beverly Hills by the sea?

"That's easy!" laughs developer Frank Murphy, an easygoing guy with a gray mustache. "It's super attractive and [housing is] very, very scarce."

Murphy sits in his basement office on Venice Boulevard, near the canals, about halfway between Abbot Kinney and the ocean. He constructed the building in the 1980s, a rectangular thing, gray, yellow and turquoise with square windows, three stories, five units on two lots. This is what passes for density in Venice.

"For me to build this building today would be highly difficult," he says. "I would get three or four units as opposed to five. The rules haven't changed. But the way they interpret those rules has. And that's politics."

Many neighborhoods in L.A. have fought development, but none has done it with quite the same zeal as Venice.

According to census data analyzed by Dario Alvarez, an urban planner who works with Murphy, the Los Angeles Metropolitan Area (which includes Los Angeles and Orange counties) added nearly 2 million housing units between 1960 and 2010. Housing capacity grew from 2.5 million to nearly 4.5 million units, an increase of about 80 percent.

By contrast, the number of housing units in the 90291 ZIP code, which makes up most of Venice (everything north of Washington Boulevard), stayed more or less the same.

Which is not to say there was no new construction. But any modest gains were offset by houses literally taken off the market. For example, in 2002, when Julia Roberts bought a $1.2 million, two-story house on one of the coveted, picturesque walk streets, she also bought the lot next door, tore down that house and installed a swimming pool. (She sold her house to Tim Robbins, in 2010.)

"She was the first super A-lister that bought here," Solo Scott says. "That was one of the big news items that really kicked it off."

Glitzy new construction looms in Venice.
Glitzy new construction looms in Venice.
Ted Soqui

Between 1960 and 2010, at a time when the population of the city and the county was going up (the city added 1.3 million people, the county 3.7 million), the population in the 90291 ZIP code actually fell, by about 20 percent. The other parts of Venice, south of Washington Boulevard, saw an increase in both development and population.

Anti-development activists like to argue that development fuels gentrification, that the construction of new, high-end apartment buildings makes the whole neighborhood more expensive.

But the case of Venice is a counterpoint. For the last 50 years, Venice has successfully fought developers to a stalemate. The housing supply stayed constant, while demand grew. As a result, the value of property in Venice has soared.

In 1996, according to data provided by Zillow, the average home value in Venice was $251,000 — more expensive than Silver Lake and Encino but cheaper than Westwood, Studio City, Mid-Wilshire and Los Feliz. Today, Venice's average home value is nearly $1.6 million, more expensive than all of those neighborhoods — more expensive, in fact, than its historically tony neighbor to the north, the city of Santa Monica, which, according to Alvarez's research, added more than 10,000 dwelling units between 1960 and 2010.

"Santa Monica has grown even higher, they've allowed a tremendous amount of density," says Mark Ryavec, president of the Venice Stakeholders Association. "The trouble in Venice is you're running right up against an almost universal opposition to changing the building height."

Perhaps without realizing it, density foes have laid the foundation for Venice's gilded age.

"It's OK to build a $3 million house," Murphy says, "but not OK to build two $1.5 million houses on the same lot."

Walk around Venice today and you'll see construction everywhere. Every few blocks, a home is being torn down, remodeled or built. Most of the newer homes are modernist gray boxes, designed to maximize usable space.

"A lot of it is schlock, midlevel quality," Scott says. "It's 3,000 square feet next to 100-year-old California bungalows. It's a money grab."

The history of Venice is, to a certain extent, the rise and fall and rise of a tourist attraction.

"Venice of America" was dreamed up by Abbot Kinney, a well-to-do, tweed-wearing, would-be intellectual and tobacco millionaire. In the words of Kevin Starr, in his book Inventing the Dream, Kinney was "well traveled, well read, well languaged (he translated from the French a history of the Civil War by the Comte de Paris), well intended and well endowed." He was a Christian, a do-gooder, a snob and a businessman.

"Kinney envisioned Venice as an upper-middlebrow Italianate Chautauqua resort for Greater Los Angeles," Starr writes — a place where people would buy vacation homes (hence the small lots) and take in lectures, recitals, operas and plays. Kinney even hired the most famous actress of the day, Sarah Bernhardt, to perform at the 2,500-seat auditorium overlooking the ocean.

The idea was a flop. Southern Californians could not have cared less about Bernhardt or lectures or opera. And so Kinney deftly pivoted and turned Venice into a West Coast version of Coney Island. He bought the original Ferris wheel from the Chicago World's Fair and built a skating rink, a bowling alley, a shooting gallery and a bathhouse. In short, it became the Disneyland of its day, drawing tens of thousands of visitors on the weekends.

When Kinney died in 1920, a power struggle developed between local business interests, and Venice began to fall into disrepair. Its canals, lovingly installed by Kinney to mimic the city's namesake, grew stagnant and slimy. The obvious solution was for the town to be absolved by nearby Santa Monica, but that idea was defeated. So Venetians turned east toward Los Angeles, the borders of which were still miles away.

Just as L.A. had wanted a harbor and more water, it also wanted a beach town, so it took San Pedro and the water in the Owens Valley, and it took Venice, annexing it in 1926. But the powers that be didn't like what they got. They didn't like the Mediterranean architecture, the narrow streets, the massive piers and the filthy canals, most of which were filled in with cement as soon as L.A. got the chance.

Slowly, Venice began to resemble a typical L.A. suburb. But the city neglected Venice, which became shabby. By the 1950s, people were calling it the "Slum by the Sea." In reality, it was an eclectic mix, with European immigrants, clothing-optional beaches, senior housing, Holocaust survivors, artists, beatniks and an African-American working class that settled in the Oakwood area.

In the 1960s, Los Angeles decided to raze much of Venice. More than 500 buildings, including a historic hotel, were demolished before residents obtained a court order to halt the destruction. Venice was allowed to hang on as a quirky, sleepy bedroom community. The last remnants of Abbot Kinney's amusement park faded away. Any tourist who happened upon the boardwalk likely was lost.

Frank Murphy moved to Venice in 1975 from St. Louis. His first job was working for artist Chris Burden, who was constructing something called a B-Car, a small, one-seat automobile that was supposed to go 100 miles an hour and get 100 miles to the gallon.

"He was a crazy sonofabitch," Murphy says. "He could drive that thing up and down the boardwalk testing it out, going 70 and 80 miles an hour. There was nobody here."

Around that same time, Solo Scott was growing up on a walk street not far from the beach.

"It was a smaller town, a poorer town," Scott says. "A lot of us were on food stamps, welfare. But definitely more of a community. It had like a beach town vibe."

Scott started surfing when he was 7. He was friends with Tony Alva and Jay Adams — part of the Dogtown crew — though he was a bit younger than they were. Even on weekends, they largely had the beaches to themselves.

In the spring of 1972, the city opened a bike path along the boardwalk, part of an 18-mile route connecting Torrance with Santa Monica. Also in the early '70s, the polyurethane wheel was invented. The softer wheel had a better grip, allowing skateboarders and roller skaters to take to the streets.

Then, in 1977, someone started renting roller skates out of the back of his van near the boardwalk. He called his business Cheapskates. Between the new plastic wheels, the new bike path and the rise of a new musical genre called disco, the boardwalk began to attract a new kind of visitor.

"Basically what happened was the disco craze came to town," Scott says. "Disco, roller skating, and then vendors started setting up shop. That's when it started to change. That's when it turned into a tourist attraction again."

Venice in 1993
Venice in 1993
Ted Soqui

But the disco skaters and street vendors didn't fight crime, which continued to skyrocket throughout the '80s and early '90s, especially in Oakwood, where the Venice 13 and Shoreline Crips gangs regularly did battle.

"It was so prevalent that the cops just waved their hands," Scott recalls. "They weren't doing anything."

The number of homeless people sleeping on the streets of Venice began to grow exponentially.

"In the '80s, there was a huge homeless encampment on the beach," Venice resident Anne Zimmerman recalls. "When the city broke it up, it felt like an assault in Vietnam. There were helicopters on the beach shining spotlights. It was intense."

For all the dizzying changes Venice has been through, there are still homeless encampments up and down Rose Avenue. There are still throngs of tourists at the boardwalk on the weekend. There are still incense sticks for sale, and henna tattoos, and gutter punks loitering about. There are still the Sidewalk Café and Small World Books, the same slices of pizza for a few dollars and the same sunglasses for $5.99. There are still Muscle Beach and paddle tennis and basketball and handball, still music blasting from boom boxes and still Harry Parry. Yes, there is a newly opened Poké Shack, and the Jamaicans who sell their homemade CDs now accept credit cards via Square on their iPhones.

There is a sort of cultural inertia on the boardwalk that's impervious to gentrification. The buildings just off the boardwalk, however, are a different story.

There aren't many apartments in Los Angeles that stand three feet from the sand, with bedroom windows that look out onto the Pacific Ocean. Carlos Camara has one of them.

Camara is from Mexico. He moved to L.A. about 20 years ago to study physics at UCLA. He lived in Westwood, near campus, for about six years, and then his friend told him about a room for rent at the Waldorf, right on the boardwalk, about as close to the beach as you could get. It was a small studio apartment on the first floor for $800 a month — not cheap but far more affordable than most places by the beach.

"It's a New York–on-the-beach type of living situation, and all that comes with it," Camara says. "Smaller apartments, people on top of each other. You have the boardwalk, which is kind of intense. I love it. Some of my best friends are other tenants, to this day."

A few years after Camara moved in, a couple moved out of a one-bedroom on the top floor of the building, which faced the ocean. Camara talked to the manager, and he moved in. The rent was close to $2,000 a month — again, a hefty price tag at the time, but with that view, who could resist? Since the apartment is covered under the city's rent-stabilization ordinance, which limits how much a landlord can raise the rent, Camara pays $2,600 a month today — in a neighborhood where rents average more than $5,000, according to Zillow.

"Right now it's a deal," he says. "Of course I'm fully aware of that."

Carlos Camara inside the beachfront, rent-controlled Venice apartment where he’s lived for two decades
Carlos Camara inside the beachfront, rent-controlled Venice apartment where he’s lived for two decades
Ted Soqui

Living where he does was great, he says, until about three years ago, when a guy named Carl Lambert bought the building. From then on, when a tenant moved out, his or her room would be converted into a short-term rental. That is, the Waldorf was slowly being turned into a hotel. Now, Camara says, there are only 10 long-term tenants left in the building of 32 units.

"We don't know our neighbors," says Camara, who lives with his wife. "Not having neighbors is a big deal. What it means is you don't have people who have a vested interest in the place being safe."

Today, construction workers are a near-constant presence at the Waldorf, gutting vacant apartments and turning them into modern hotel rooms. Camara's apartment, meanwhile, has cabinets that don't quite close and windows that barely open.

According to Camara, Lambert also tried to take away the remaining tenants' parking, but he backed off when Camara and the others got a lawyer.

"The intention is clear," Camara says. "If it was up to him, we'd be out of here."

Lambert owns at least four other buildings like the Waldorf, all right on the beach, which he has casually and, some say, illegally converted into hotels. In June, the city attorney filed a lawsuit against Lambert over a different building, the Venice Suites, not far from the Waldorf.

"In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate hotels has got to stop," according to a press release from L.A. City Attorney Mike Feuer. Lambert declined to comment for this story, saying only, "With all due respect, I don't want any quotes from me right now."

Lambert isn't the only property owner converting rent-stabilized units into short-term rentals. Venice is teeming with them. A six-story building at 5 Rose Ave. used to be rent-stabilized and Section 8 housing. Now it's a boutique hotel, Air Venice, where rooms start at $179 a night. Next door, at 15 Rose Ave., is another apartment building that's been converted into a hotel — the Rose.

"We never set out to create the perfect hotel," its website reads. "Our walls are thin, and the building is wonky. ... But it's not like any other hotel. And we like it just like it is." Rooms with queen beds and, yes, shared bathrooms start at $185.

The residential section of Venice, meanwhile, is littered with houses sporting numbered keypads at their front gates — the telltale sign of an Airbnb rental.

According to the website Inside Airbnb, which scrapes data from Airbnb, there are nearly 2,000 listings in Venice. The vast majority of these listings are entire homes or apartments. A 2015 study by the Los Angeles Alliance for a New Economy (a union-backed group) found that in Venice, "As many as 12.5 percent of all housing units have become Airbnb units, all without public approval" — a far higher concentration than any other neighborhood in the city.

Airbnb spokeswoman Shannon Murphy calls the numbers used by LAANE and Inside Airbnb "cherry-picked" and "inaccurate," and says "the scale of Airbnb activity in Los Angeles is too small to have a significant impact on housing prices."

But housing advocates say short-term rentals — whether done on Airbnb or privately, as in the case with Carl Lambert — have eviscerated Venice's already precarious rental market.

"We're talking about thousands of rent-stabilized units in a very tight market with very little production," says Becky Dennison, executive director of Venice Community Housing. "There's no getting around the fact that Venice has been the most impacted by short-term rentals."

Dennison lived in Venice for about a decade, starting in 1992. Even though the boardwalk was a tourist destination, she says, "Venice emptied overnight." One of the few hotels in the neighborhood, the Hotel Erwin, almost went out of business.

All that has changed in the last five years, with the rise of Abbot Kinney as well as Airbnb, which offers customers a taste, supposedly, of what it is like to live in Venice as Venetians do.

"I have one catty-corner, one next to me, one behind me, one two houses down," says Zimmerman, describing her block on one of the idyllic walk streets near Lincoln. "I don't know who's turning on the lights next door. I don't know who's parking illegally in my parking space. It's very weird."

She adds: "I just want real neighbors."

Since 2014, Los Angeles City Council has been struggling to come up with a law that would regulate short-term rentals. An ordinance sponsored by Councilman Mike Bonin, who represents Venice, has been bouncing around from committee to committee, with no end in sight. The city of Santa Monica, meanwhile, passed its ordinance in June 2015. Airbnb has filed a lawsuit claiming the law violates the First and Fourth Amendments.

In Venice, meanwhile, short-term rentals continue to crop up, unfettered, and every week more rent-stabilized units go off the market.

"There's just no incentive to have a long-term tenant there," says real estate agent Alex Quaid. "Santa Monica has cracked down on it, but the city of L.A. hasn't."

There are, of course, other factors at play in the gilding of Venice. Google opened an office in Venice in 2011; Snapchat followed in 2015. Both have employees who live nearby.

"A lot of people in that tech world value walkability," Quaid says.

With Snapchat expected to go public soon, many of those employees will become millionaires overnight. According to a recent article in The Hollywood Reporter, real estate agents are bracing themselves for a rush of nouveau riche tech bros looking to buy homes in Venice.

Home prices in Venice will almost surely continue to rise, even relative to the rest of L.A.'s expensive market. The City Council recently approved the creation of a Business Improvement District, essentially a special business tax to fund cleanup and security guards in Venice. Dennison says the plan's "stated goal is to raise property values, and it made a lot of promises to do so."

One might ask, should we care? Does it matter that none of the employees in Venice (besides the tech sector) can afford it?

"It's the most diverse coastal community in the United States," says long-time Venice resident Judy Goldman. "If you care about a community being healthy, it needs to be diverse. If not, it will lose everything that makes it special. It will become Disneyland."

Editor's note: A portion of Judy Goldman's quote has been removed to respect a request she says she made of the writer.

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