Downtown San Jose vacancy near 30%

Downtown San Jose is sitting on a lot of empty office space. Depending on who is counting and which slice of the market they track, vacancy in the core has hovered in the low 30s and at times the mid 30s. Governing, citing Colliers data, put downtown San Jose at 31.5% in 2024. Savills later pegged the first quarter of 2024 at 35.6%. Either way, the signal is the same. Too much of downtown’s office inventory is dark. (governing.com) That kind of vacancy does not stay trapped inside office towers. It leaks onto the street. Fewer workers means fewer routine coffee stops, lunch runs, and impulse purchases that make a downtown feel automatic. San Jose’s own economic strategy page now lists downtown’s negative perception, quality-of-life concerns, and citywide commercial and office vacancy as core challenges. The problem is not theoretical anymore. It is visible at storefront level. (sanjoseca.gov) One of the clearest signs is Starbucks. A San Jose Spotlight report in October 2025 said four San Jose Starbucks stores had already closed as the chain cut about 1% of its North American locations. Then, on April 3, 2026, the Silicon Valley Business Journal reported another downtown San Jose Starbucks closure on First Street. The card’s shorthand — eight downtown stores down to two — captures the broader point. A chain built to harvest dense commuter traffic is pulling back in the urban core. (sanjosespotlight.com) The office side helps explain why. Downtown San Jose spent the last cycle preparing for a wave of demand that never fully arrived. Google’s Downtown West plan, approved by the city in 2021, still allows up to 7.3 million square feet of office space, 4,000 housing units, and 500,000 square feet of active uses across about 80 acres near Diridon Station. But in early 2026, KQED reported that almost none of that grand buildout had materialized, and Google would not offer a clear timeline beyond saying it was still evaluating its real estate needs. (sanjoseca.gov) Other big bets also stalled or arrived into the wrong market. Jay Paul’s 200 Park Avenue tower opened as a 971,000-square-foot trophy office building and was still seeking its first tenants when it refinanced in late 2024. Across downtown, office values have already reset hard. A tower at 303 Almaden Boulevard sold in 2023 for about 70% less than its 2017 trade price. A two-tower complex near North Market and West St. John sold in 2024 for 77% less than its 2019 price. Those are not normal markdowns. They are the market admitting that yesterday’s rent roll assumptions are gone. (therealdeal.com) That is why “wait for the office market to come back” is not much of a strategy. San Jose is still trying to attract jobs and market itself as a growth hub, but landlords in the core need income now, not in the next cycle. Buildings that cannot land traditional tenants have to be pitched differently: smaller suites for owner-users, medical or education tenants where zoning allows, showroom space, quasi-industrial back-office uses, even partial residential conversion where the math works. The alternative is to keep marketing empty floors as if 2019 is about to return, while the ground floor keeps losing coffee shops. And downtown has already supplied the concrete image for what that drift looks like: another Starbucks dark on First Street, in a district that was supposed to be full by now.