San Jose business leaders see a thriving downtown — just not right now
A rendering of Urban Catalyst’s Fountain Alley building which will feature office and retail space near the future BART station. Photo courtesy of Urban Catalyst.

With many businesses shuttered and trash mounting, it is hard to imagine how downtown San Jose will evolve into the metropolis city leaders are hoping for.

But experts at a recent San José Spotlight panel were confident that with a little patience, a lot of housing and eager investment from local developers, a vibrant downtown core really is possible for San Jose— even post COVID-19.

The panel included Gary Dillabough who has acquired more than 20 properties downtown through his development company Urban Community, Erik Hayden, founder of Urban Catalyst, a local real estate equity fund, and Blage Zelalich, downtown manager for the city of San Jose, who has seen the area grow and change over the past two decades.

To provide insight into how the city will look in 10 years, the panelists reflected on the city’s major downtown plans, such as Google’s mega campus, high-speed rail, the Bay Area Rapid Transit extension and high-rise renovation.

‘Utopian version’ 

Hayden, who has built housing, office space and hotels in downtown, said he wants to see a “utopian version” of the city by 2030. By then, he said BART to Diridon station will be complete, high-speed rail will be linked to the hub and, of course, Google will be moving in.

All this combined, according to panelists, will encourage others to build in the 10th largest city in the country.

Zelalich said some of the “smaller projects” are equally as exciting. She said the corner of First and Santa Clara Street is currently being transformed from a “no activity corner” to having four new buildings in various stages of renovation.

Dillabough is helping revitalize the Bank of Italy, a 90-year-old downtown icon, while Hayden is helping revamp property on this historic Fountain Alley to include offices, retail and restaurants, which will help alleviate San Jose’s retail deficit.

San Francisco developer Jay Paul has also swooped in to convert a 1970s mixed-use campus into a glossy 3.8-million-square-foot office park at CityView Plaza on W. San Fernando Street.

San Jose State University will also play a key role in shaping and blending with downtown as the campus expands and more student housing is built, Zelalich said.

“I want to see this as an innovation center of the world,” Hayden said. “I want to see tech companies to not just say, ‘yeah, yeah, we’re expanding to San Jose because there’s nowhere else to grow in Palo Alto, in Cupertino, in Mountain View. I want them to say, we’re going to San Jose because that’s where the best people in the world create the greatest ideas that mankind has ever seen.”

What about COVID-19?

According to Hayden, COVID-19 hasn’t slowed any of Urban Catalyst’s projects. But some building plans may be modified to include touchless entry, touchless elevators and additional HVAC systems to provide cleaner air.

While these larger developments aim to bolster downtown in the long term, Zelalich said the city is working hard in the short term to ensure smaller businesses survive the pandemic, adding that 1% of San Jose businesses downtown have likely closed permanently.

“The vast majority of the businesses that are seemingly shuttered are shuttered because they really can’t operate under the current business conditions,” Zelalich said. “We’re just going to continue to be supportive in all of the ways that we are able to.”

On the bright side, Zelalich said developers and businesses are still looking to come to San Jose— even during the pandemic. Nirvana Soul, a coffee shop, recently opened along with the bakery Holy Cannoli on Santa Clara Street.

Major obstacles

The panelists said even when businesses open and cranes fly overhead with the promise of new development, San Jose still has two major problems to work out if it wants downtown to flourish: trash and lack of housing.

Dillabough lamented about the trash he sees, specifically piles on Interstate 280.

“If we’re OK with that being our front door, I don’t think the city’s ever going to achieve the greatest they can achieve,” Dillabough said. “We have to stop accepting that and putting our foot down in talking to Caltrans and talking to the county.”

He said his other major concern is lack of housing for essential workers who cannot afford to live in the growing city.

Dillabough said it’s going to be up to private local investors and developers to look at the larger picture and add housing to their plans if they want downtown to be successful. He said it is not more offices but people that will make or break downtown. Taking the extra steps to add art and making the area feel comfortable and safe for residents is going to be key for growth, he said.

Hayden said the one positive thing about the pandemic is that it allowed the city to see how certain areas, such as San Pedro Street, could thrive and potentially reopen in a traffic-free environment.

Zelalich said the city last summer successfully blocked off the area during the Super Bowl. Traffic was similarly cut off this past July to allow for outdoor dining during the pandemic.

“When the weather is good, it is hoppin’ out there, which is fantastic,” Zelalich said. “It’s great for public life, so we are open to listening to what the businesses want.”

Contact Carly Wipf at [email protected] or follow @CarlyChristineW on Twitter.

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