Rehabs a fact of life for Malibu

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Clients pay anywhere from $30,000 to $60,000 for treatment at rehab centers like Passages, above.

Demand and supply are factors in the number of drug and alcohol addiction treatment centers located in Malibu. Treatment costs anywhere from $1,500 per night to $60,000 per month at some of the high-end luxury rehabs.

By Rick Wallace / Special to The Malibu Times

The recent Britney Spears saga has put a spotlight on the Malibu rehab industry for the whole world to see. But the business of drug and alcohol addiction treatment centers has been a fixed part of the Malibu real estate market for several years (and celebrity and other high-profile clientele are not new to them). In fact, for the $1,500 per night customer, business is booming. From one end of town to the other, the number of clients paying $35,000 to $60,000 for a month of addiction treatment outnumber the total number of Malibu hotel rooms. The treatment business in private homes has become a fact of life, and it’s still growing.

With this trend, real estate in Malibu has taken on a slightly altered look, as 28 private residences in the 90265 zip code, typically large elegant homes, are currently inhabited by addiction treatment facilities. As many as 150 patrons on any given day and night are in Malibu for this purpose, according to one source, who works within the industry and keeps notes on each facility and assists all with placements.

There is no other city in America where so many rehab facilities have taken root. A December Wall Street Journal article described Malibu as “the center of the high end of the industry.”

The implications of rehabilitation facilities, or “rehabs,” upon the Malibu community and local real estate are still coming to light. Only in the past five years has this type of luxury therapeutic treatment come to town. Promises, Passages, Renaissance-some of the names have become as familiar as local restaurants. Most of the homes used for rehabs are owned by the operators themselves. Some are rented.

State law, in an effort to encourage anonymous and successful treatment of addictions, has deemed that private homes with six beds or less may be occupied and used as a private addiction treatment center.

Malibu has become famous for its high-priced clientele. Most rehabs in town charge at least $35,000 for a month of treatment. Passages charges nearly $60,000. Treatment centers with large staffs cater to the elite of the political, entertainment, sports or business world. For them, getting clean at $50,000 is a worthwhile drop in the bucket.

Rehabs do have their detractors. The most profound complaint against the treatment centers in Malibu concerns a phenomenon called “clustering.” Because they can be so profitable, yet are limited to only six beds per residence, the treatment centers obtain nearby homes by purchase or rent to expand their business. An operation in the Trancas area, for example, owns five homes all practically next door to each other. A neighbor, who did not want to be identified, described the situation as a nightmare.

“Sometimes you can’t even drive by all the cars they have out there,” the resident said, among other complaints.

For the rehab business, it is cost efficient to expand the patient base by using many homes near each other for bed space, though the state Legislature probably did not anticipate clustering.

There is little to indicate that rehabs have adversely affected the market. Rehabs represent a new supply of buyers and tenants. The demand on large, quality estates has increased due to these entities. In that respect, prices have only been helped, both in the sale and rental markets. One homeowner of a large estate that recently sold, said, before they listed the property for sale or lease, that they hoped to attract the rehab community.

The vast majority of clients come from outside California, said one proprietor. Many of them, during a standard month of treatment, fall in love with Malibu enough to buy or rent on their own, providing another layer of demand upon our marketplace.

There are different types of facilities, and Malibu has them all. Some have opened and closed along the way. Most are intense centers to treat alcohol and/or drug addictions. Daylong sessions of therapy, mixed with relaxation, recreation, meditation and fine foods are the program. “Sober living” units are a second prevalent type, where clients have more freedom to come and go. No facility of any kind is located on any beach.

What about prospective buyers afraid to purchase because of the presence of a rehab?

On this issue, the local industry has a unique dilemma. Rehab facilities are a “protected class.” That is, Realtors cannot identify them or discuss them with prospective clients in any way, just as they cannot describe the ethnic, religious or sexual preference character of a home or neighborhood, etc. It is illegal to tell a prospective buyer, “There is a rehab in that house.”

On the other hand, it is imperative for Realtors to make buyers aware of “neighborhood conditions,” to which the frequent sight of many parked cars apparently used by employees of a business qualifies. Agents are thus tight-roped by disclosure laws to make prospects aware of neighborhood conditions, yet are forbidden to reveal what the source of this particular condition may be. (Neighbors are not so constrained, however.) Though difficult to quantify, there has been no notable trend of deals lost due to a treatment center’s presence. In areas known for their presence such as Cavalleri, Malibu Park, Big Rock and Trancas, average sale prices still hit new records.

According to one realty office manager, Malibu has not suffered from any stigma as a “rehab town that should be avoided.” Rehabs have been a fact of life for at least five years, the same five years that values skyrocketed from a median of less than $1.2 million to more than $2.7 million.

Apparently, the supply for such establishments has not yet been saturated. Ultimately, the number of successful operations will be a matter of supply and demand, as treatment needs rise or fall and cost issues dictate.