Downtown San Jose needs to rebrand itself, study says

Downtown San Jose needs to rebrand itself to revitalize its struggling retail landscape and encourage a more welcoming and walkable environment, according to a new study presented to city lawmakers this week.

A downtown retail study, presented to the city’s Community and Economic Development committee on Monday, details the history of downtown San Jose’s economic changes since the mid-1950’s, highlighting the city’s growth and growing pains. It will come back to the committee for further discussion on March 12.

Downtown San Jose, which the study defined as spanning San Jose’s Market Center to City Hall to Highway 280 and The Alameda neighborhood, has an 8.5 percent retail business vacancy rate, which is higher than a “healthy” 5 percent vacancy rate, according to the report.

Not a live-work environment

Bars and restaurants “dominate” downtown retail space, making up about half of the area’s total retail sales, but businesses to fulfill daily needs — filling prescriptions, buying clothes or groceries — are scarce. It’s something the city hopes to fix.

“As an urban retail environment, downtown San Jose has some challenges,” Nanci Klein, the city’s assistant economic development director, wrote in a city memo. “These challenges include the fact that overall income of downtown demographic is lower than the rest of the city. In 2016, median household income in the study area was approximately $75K while
median household income citywide was approximately $90K.”

The city plans to develop a new “brand” for downtown San Jose to attract more patrons, the report said, acknowledging that focus groups said “the downtown environment can feel dirty, unwelcoming and/or uncomfortable.” The groups also noted that “long term vacancies in key locations contribute to making downtown feel like it is in decline,” pointing to homelessness as a significant contributing factor.

While the report says downtown San Jose’s population since 2000 is expected to double by 2020, the area is “still not perceived as a live-work environment,” and only 11 percent of downtown residents also work there, which is lower than expected for a mixed-use district.

The report recommends adopting a policy related to on-campus corporate campuses to encourage office workers to migrate into the downtown core and avoid falling “into the pattern of driving into work in the morning and driving out of work at night without ever setting foot outside of the walls of their office building.”

But the city is also becoming a hot destination for entertainment and culture, the report says, which could spur an increase in foot traffic and downtown activity.

About 2,200 residential units are under construction, while downtown office vacancy hovers between 10 percent and 11 percent. Several new coffee shops and restaurants have opened in the last 18 months, according to city documents, including Academic Coffee, Chromatic Coffee, Elyse Restaurant, Earl of Sandwich, Bishop’s Barber Shop, Tea Alley, and Formula Nutrition. Investors are beginning to renovate the neglected Bank of Italy, Lincoln Law School, Hank Coca’s Furniture and Walgreens buildings.

Rising costs for businesses

But as Silicon Valley’s fastest growing area, some downtown San Jose businesses feel the pressure of development and keeping up with rising operational costs.

Abdi Ahmed runs the 25-year-old Saint Claire Newstand on S. First St. and the 15-year-old Nile Parking lot businesses on S. Second St. with his wife, owner Senayite Shenkut. Ahmed said he and his wife have seen declines in both businesses in the last two decades.

“The business is not like it used to be,” Ahmed said. “It was great then. I don’t know what happened.”

As the downtown area evolves, Ahmed and Shenkut are left with few options. As for expanding either business, he said that’s not something they can do so easily without big connections.

“If this business is slow, you have to have enough money to jump businesses,” he said, “but we’re stuck here.” he said.

Adolfo Carrasco Perez helps run his mother’s specialized pastry shop, Claudia’s Pastes, on E. Santa Clara Street a few blocks from City Hall.

“It means pretty much everything,” he said. “It’s our time, our effort, our passion for making good food, my mother’s love for cooking.”

Similar to empanadas, he said his mother spent 20 years perfecting her home-baked pastes recipe, launching her first business about six years ago in San Mateo. The shop has since closed.

But running a small business downtown comes with high overhead, he said, and it can be hard to keep up when business is slow. Apart from keeping rising rents for the space, customers don’t have designated parking, Perez said, which means he relies heavily on foot traffic — something San Jose is lacking the study said.

Solutions identified

The report outlined strategies to bolster the downtown retail environment amid ongoing pressure from online retailers and changing demographic trends. The plan includes identifying gaps in current retail offerings, removing barriers through policy changes and ensuring mixed-use projects are in viable locations with desirable ground floor tenants.

“To make a city walkable, it’s all about — what are people walking by?” said Scott Knies, executive director of the San Jose Downtown Association. “Are they walking by vacant buildings? Papered over windows? Windows with the lights off? Parking lots? ‘Missing teeth’ as we call it — kind of an urban planning metaphor. And a big part of it is people need to feel safe as well.”

He pointed to this week’s First Friday festivities as a downtown experience that excites him about the future of San Jose.

“We need to just keep going on the path we started. More density,” he said. “A lot of this is helped by having a lot of people living downtown, at all income levels.”

Contact Kyle Martin at [email protected] or follow him @Kyle_Martin35 on Twitter.