Reviving downtown San Jose remains an elusive goal

Downtown San Jose looks like a ghost town. Boosters claim an economic revival is within reach for the heart of Silicon Valley. But those who live and work in the city’s core are skeptical.

John Seol, owner of a small cellphone repair shop just blocks from City Hall, told San José Spotlight he hears about festivals and thriving foot traffic in neighboring cities such as Campbell, and doesn’t see that energy in downtown San Jose. Instead, he sees pervasive homelessness and friends going out of business due to declining foot traffic. He’s been downtown for five years, but is reaching the end of his rope. Just this year, his shop flooded twice—a problem he blames on a broken city pipeline.

“If I was going to hang out somewhere, I wouldn’t want to hang out downtown,” Seol said.

Prior to the COVID-19 pandemic, San Jose’s downtown was showing signs of growth. Developers were breaking ground on new towers, while tech companies like Google plan to develop a multi-billion-dollar downtown campus that will bring thousands of people into the city’s core. New restaurants were opening up to take advantage of the flood of young tech workers looking for food, drinks and entertainment in the downtown area.

The pandemic hit downtown hard, forcing restaurants to close, canceling conventions and stalling development. Some tech companies are still developing offices downtown, but their workers went remote, causing foot traffic to become nonexistent.

Be like Campbell

Downtown San Jose has struggled for years to transform itself into a destination for the million-plus people who live in surrounding neighborhoods. The city also competes with bordering cities like Campbell, Los Gatos and enclaves like Willow Glen that have eclectic restaurants, bars, shops and events that draw a younger demographic.

Downtown Campbell has a robust schedule of events in its historic downtown, including “First Fridays” street entertainment, a robust Sunday Farmers Market and its annual Oktoberfest. Parklets line its main downtown corridor—San Jose also started an al fresco program to allow and encourage outdoor dining during the pandemic.

Similar events dominate the calendar in nearby Los Gatos, which over the summer closed down its main drag on certain days for live music. Randi Chen, project coordinator for the Los Gatos Chamber of Commerce, told San José Spotlight the town also expanded its use of parklets during the pandemic. Now it’s in the process of converting them into semi-permanent installations, designed to be up for a decade.

“Adding outdoor dining really made a huge difference,” Chen said. “People really enjoy that, and our town has been open to it, so it’s really thrived.”

Derrick Seaver, CEO of the San Jose Chamber of Commerce, said San Jose’s downtown has a lot going for it, including a large population of nearby consumers. But businesses can’t take advantage of the area without foot traffic, which has been decimated by tech workers continuing to work from home.

“You have got to have a lunch and daytime crowd to truly activate (businesses),” Seaver told San José Spotlight. “And a lot of that is out of our control.”

Crushed by COVID-19

Gareth Morris, who works in downtown San Jose at the restaurant Good Karma, told San José Spotlight he finds it encouraging to see the city investing in events like First Fridays, a monthly arts and culture exhibit in the SoFA district, and he wants to see more outdoor events like flea markets and park walks that cater to all ages.

But he noted the local economy was fragile before the pandemic, and it’s only gotten worse—which makes a speedy recovery more difficult.

“Little spots here and there were dead pre-pandemic, but not at the scale it’s at right now,” he said.

Blage Zelalich, downtown manager and interim deputy director of business development, previously told San José Spotlight sales tax revenue decreased about 50% downtown during the pandemic. According to the city, approximately 35-40% of the city’s 60,000 businesses may have closed during the pandemic, although it’s unclear how many permanently shuttered.

The return of San Jose State students has been heralded by local businesses as a key part of reviving downtown. One recent study showed that sales tax from student spending accounts for tens of millions of dollars in the downtown core.

Councilmember Raul Peralez, whose district includes downtown, told San José Spotlight that students are a vital ingredient in the area’s turnaround. Another is getting people to want to live there, which the city is still working on.

“We’ve been building up more and more residential high-rise towers to try and boost our density of population within the downtown core,” Peralez said. “But it’s not there yet.”

‘I’m out of here’

Attracting downtown dwellers also requires maintaining essential commerce, such as restaurants, grocery stores and retail outlets. But some businesses claim downtown San Jose has become an increasingly hostile place to make a dollar. In recent years there has been an exodus of staple businesses, including the Safeway on South Second Street in 2019, and the closure of Ross, the largest clothing store downtown, a few years prior. Remaining businesses must compete with popular high-end shopping centers such as Westgate Valley Fair and Santana Row just a few miles away.

Alfredo Diaz, co-owner of Diaz Mens Wear, said he’s been working in downtown since 1985. He said if you walk down Santa Clara Street in either direction, there are vacant buildings left and right. He noted the city invests in individual downtown developments, such as San Pedro Square Market, but neglects entire business strips.

“They forget about Santa Clara Street,” he told San José Spotlight.

He’s getting killed financially trying to keep his store open. His rent today is double what he paid 20 years ago.

“I’m out of here when my lease ends,” Diaz said.

Creating vibrancy—a vague, know-it-when-you-see-it concept—requires holistic solutions. Robbie Silver, executive director of San Francisco’s Downtown Community Benefit District, told San José Spotlight his organization has focused heavily on cleaning up graffiti and addressing quality of life issues. They’re also creating an asphalt art mural on Battery Street and holiday projection lighting to make the night life more inviting. San Francisco Mayor London Breed invested more than $9 million in funding for programs to support downtown San Francisco’s economic recovery.

“If people don’t feel comfortable working or playing downtown, your economic center really falls apart,” Silver said.

Civic leaders in San Jose have also promoted public art projects to boost downtown economic recovery. The Serpentine Pavillion, a temporary structure of fiberglass blocks, is anticipated to draw visitors with art shows and speaker series.

But some locals say the city has failed to market downtown San Jose as a destination, and hasn’t done enough to distinguish itself from other downtowns.

“From my point of view, I don’t think the downtown has done as good a job of articulating what you could do outdoors downtown, as some other areas have,” said Robert Chapman Wood, professor of strategic management at San Jose State.

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.