Summer in Malibu: Rentals Going Fast Even as Prices Rise
This story first appeared in the June 20 issue of The Hollywood Reporter magazine.
Brian Grazer's former three-story beachfront estate in the Malibu Colony hit the market for lease this summer for the first time. The Mediterranean-style five-bedroom home -- purchased by an unnamed buyer in February for $17.4 million -- was decorated by White House designer Michael S. Smith and boasts an indoor pool, an elevator and a teahouse. It's listed for $175,000 a month -- among the most expensive rentals in the gated community. Apparently that's not a hindrance: It already has been snapped up for August and has received ample interest for July.
It is a sign that the beachside community's leasing market has bounced back to peak levels after an unusual dip for the tony city during the economic downturn.
"The market is performing flawlessly," says Rodrigo Iglesias, an agent at brokerage Hilton & Hyland. "We are back at the levels of activity that we had prior to the 2007-2008 crisis, and prices have improved from that time."
Rental rates are on their way up in popular locations like the Colony, say agents. On nearby Malibu Road, a three-bedroom property nearly doubled its asking rate from last summer to $75,000. And the number of listings at the highest levels is increasing.
"If there were two listings asking $200,000 last year, now there are five asking $200,000 for the summer months," says Madison Hildebrand, who owns the Malibu Life unit of Coldwell Banker. "It's unprecedented."
Agents say rising prices haven't slowed leasing velocity. Among the notable deals, Steven Spielberg is rumored to have leased his home on Broad Beach, which boasts 130 feet of (eroded) beach frontage, for about $150,000 a month.
"Ultra-high-end homes of $75,000 and up that are furnished impeccably with amenities such as a theater, gym and pools tend to lease relatively quickly," says Sandro Dazzan, an agent at Coldwell Banker. "All the homes are pretty much leased."
Well, not entirely. For those who didn't plan ahead, some gems still are obtainable.
TV producer-director Kevin Bright (Friends) owns a Broad Beach abode, with 80 feet of beach coastline, a 13-car garage and an infinity pool and spa, that is listed for $75,000 a month. A glass-clad Malibu Road house Kim Cattrall's character called home in the Sex and the City movie is available for $100,000. And David Charvet and Brooke Burke have listed their six-bedroom Italianate residence in Serra Retreat at $50,000 a month.
Perhaps the most expensive is a 7-acre estate that was featured in Funny People and was home to Evan Rachel Wood's True Blood character. Known as La Villa Contenta, the Pacific Coast Highway property near Latigo Canyon still is available at a stunning $350,000 a month.
Even at that price, the rates are a bargain compared with the other summer bastion of the well-heeled: the Hamptons, where ultra-luxury rental home rates can run $500,000 a month and even top $1 million.
"I think the [Malibu] prices are really attractive," says Coldwell Banker's Chris Cortazzo. "With the new Nobu and Mr Chow, Malibu now is a year-round destination, and people who ordinarily went to the Hamptons come here for a different lifestyle."
The demand is high enough that some developers even are building houses with an eye primarily on short-term renting. That's the idea behind architect Michael Sant's nearly completed three-bedroom home on a hilltop off Saddle Peak Road that he plans to lease for $25,000 a month this summer.
"There's sort of a new category emerging of architecture for rent," he says. "People that really like design and travel are realizing that in their vacation rental they can find high-level taste in the place they want to be."
Rental interest is so high that peer-to-peer leasing websites such as Airbnb and Vacation Rentals by Owner have been doing booming business, even in the luxury market. A recent look at the Airbnb site revealed more than 100 rentals ranging from $65 to nearly $2,000 a night in the area.
Not everyone is happy about it. In May, the Malibu City Council -- spurred partly by complaints from neighbors of some of the busiest Airbnb rentals -- authorized officials to subpoena the online companies for the names of homeowners on the sites to ensure they pay their proper short-term rental taxes. The city has only 55 homes registered to handle rentals of 30 days or less.
If the move is successful, says Hildebrand, owners might be less willing to rent short-term. "They are going to want a longer-term tenant than a shorter-term so they'll hike their prices to absorb the tax."
But agents don't fear that further inflating prices will pose any threat to the market activity. People looking to rent in Malibu already know the most important rule.
Says Hilton & Hyland agent Chad Rogers, "If you want paradise, you need to pay for it -- especially in the 'Bu."