Deal falls through at former San Jose Safeway

An empty commercial space in downtown San Jose where a Safeway was previously located is still vacant nearly five years later, after an oral wellness company backed out of a deal to move there last summer.

Downtown advocates and residents remain hopeful another grocery store can fill the space, but officials say that could still be months or even years away.

“Having conversations with our small business community and residents, they want more options for grocery stores downtown, as we haven’t had an official grocery store downtown since Safeway left,” District 3 Councilmember Omar Torres, who represents the area, told San José Spotlight.

Torres said he’s had discussions with Chavez Supermarket and Arteaga’s Food Center, both well-known Bay Area-based grocery chains, in an effort to attract them or other outlets to the 24,000-square-foot vacant space at 100 S. Second St.

The commercial space on the ground floor of The 88, a condominium building, has been vacant since 2019 when Safeway ended its lease.

Torres said he’s hopeful that as more housing comes online downtown, combined with San Jose State University students and the potential return of more office workers, a denser population nearby can eventually help support a grocer there.

Beto Chavez, general manager for the Chavez Supermarket chain, said the company regularly evaluates potential sites that fit its criteria for expansion.

“At this moment, we do not have any plans to occupy the vacant space on Second Street in downtown San Jose,” Chavez told San José Spotlight. “Any discussions we have had about potential sites in or near downtown San Jose are purely exploratory at this point.”

An Arteaga’s representative could not be reached for comment.

Dentistry deal dies

In June, OneMedAll announced plans to occupy the space offering limited dentistry services to patients, as well as billing and health planning education for medical professionals and patients.

However, President Eric Chong told San José Spotlight the company backed out of the deal within a few months of the public announcement. Chong said there were issues with the water not running in the building due to a prior copper pipe theft, along with other unspecified issues. He said the repair timeline contributed to deferring their opening.

“We had very specific launch dates with sponsorships, and that just didn’t work out,” he said.

Gerald Lau, a broker with Prudentia Real Estate who is representing the owners of the space, said the pipes were repaired within a week of them finding out about it, and said the reason OneMedAll didn’t end up occupying the space is because it couldn’t pay the full lease amount due on day one of the contract.

“They made a number of misrepresentations,” Lau told San José Spotlight. “They keep changing their story. Our understanding was they were not able to raise money for their endeavor.”

Lau said the space is being marketed in all the right channels for retailers and grocers to see it. He attributed not being able to attract a tenant to fill the space in part to a lack of free underground parking. The garage underneath the store is owned by developer Urban Catalyst. It was a former city lot that offered Safeway shoppers validated free parking, but that ended after it was sold.

He also noted retailers and grocers he’s spoken with say they are not in expansion mode right now, and concerns over blight and crime are a contributing factor.

Torres said there are two city lots nearby that offer 90-minute free parking, but he’s still hopeful to find a solution for the underground lot.

“It’s very important that our city work with Urban Catalyst to ease the concerns around parking if we want to get a grocery store or some type of market,” Torres said.

Josh Burroughs, COO of Urban Catalyst, said there are several factors that contribute to attracting tenants to a space, but he thinks parking is not the major issue in this case.

He noted his company has recently leased out 25,000 square feet of space across the street to Urban Putt, a mini golf and bar concept, and hasn’t offered free parking there.

“It’s a pretty nice open shell of a box, you can do all sorts of things on that hard corner at Second and San Fernando,” Burroughs said of the vacant space. “You’re surrounded by parking in all directions for visitors.”

Elizabeth Chien-Hale, a member of the Downtown Residents Association, said she’s been pushing for more activations downtown, such as a farmer’s market in St. James Park.

She also suggested the vacant commercial space could host a weekly farmer’s market pop-up indoors, to help bring people to the area and demonstrate the support a grocer could experience.

“At least they would activate the space,” Chien-Hale told San José Spotlight. “The foot traffic is very low, and it’s going to remain low unless we do something.”

Contact Joseph Geha at [email protected] or @josephgeha16 on Twitter.