Tech industry’s work from home policies hurting downtown San Jose

Downtown eateries and bars took a hit during COVID-19, but now some downtown businesses are grappling with a major loss in foot traffic after many tech companies continued allowing employees to work from home.

San Jose’s urban core is home to thousands of professionals at major tech corporations, including Adobe, Cisco and Zoom. But these companies sent workers home in the wake of the COVID-19 pandemic last year and now their offices remain largely empty as they extend remote work for safety and convenience.

Cisco, for instance, supports its employees working from home or coming into the office a few days a week. Its “no return to office” policy allows individual employees and their managers to determine where staff works to save money and expand its reach for job candidates.

Adobe is also incorporating a hybrid approach, allowing employees to work from home 50% of the time. Adobe, Cisco and Zoom did not return calls for comment. 

Google, which is hailed by some for bringing an estimated 20,000 jobs to downtown, is allowing 20% of employees to work from home with 60% on site a few days a week and 20% in new office locations. The tech giant’s campus in San Jose could take up to 30 years to fully build out.

Dan Gordon, founder of Gordon Biersch Brewing Company, said telework is killing downtown businesses.

“Businesses are now allowing long-term work at home options and that detracts from a vibrant downtown in a big way,” Gordon told San José Spotlight. 

And he doesn’t expect that to change anytime soon.

“Because of the Delta variant, most businesses and large corporate tech companies have extended their work at home policies for another six months,” Gordon said. “It’s been a crowning blow to most restaurants.”

Gordon said federal subsidies bridged the losses businesses experienced for the first 18 months of COVID, but he’s worried they may not survive if downtown employees don’t return. Meanwhile, he said, Santana Row and Valley Fair are flourishing. “Those are suburban destinations but downtown is counting on the life support of local businesses,” Gordon said.

‘Very damaging for the economy’

The impact of tech workers staying home has especially hit downtown restaurants like Sushi Confidential. Owner Randy Musterer said his downtown location is suffering, while his Campbell restaurant is thriving.  

Musterer blames the lack of customers, especially during weekdays, for the popular sushi joint’s struggles in downtown San Jose.

“The downtown business environment is affected more than other communities…when a large portion of that is tech workers,” Musterer said. “And not only are the tech workers not coming downtown to work and joining us for lunch and happy hour, but it’s all of the corporate workers. Having no corporate life is very damaging for the economy.”

Musterer said the San Jose Convention Center not hosting large trade shows also reduces the number of visiting tech workers who previously frequented local bars and restaurants.

“It’s going to take a lot longer to rebound,” he said. “Especially since a lot of these high-tech companies are pushing out the dates to bring employees back.”

City scrambles to help

Elisabeth Handler, spokesperson for the city’s office of economic development, told San Jose Spotlight that approximately 35-40% of San Jose’s 60,000 businesses may have closed during the pandemic, although it’s not clear how many permanently shuttered.

City officials tried to soften the blow last year with the Al Fresco program which allowed businesses such as gyms and cafes to move outdoors amid COVID-19 health restrictions. Lawmakers extended the policy in May.

“As downtown continues to build toward commercial and residential densities, the number of downtown dining options remains substantial despite the fact that many sectors of the economy that support restaurant activity were shut down or are operating at reduced capacity over the past 15 months,” said Blage Zelalich, the city’s downtown manager.

The city is helping to support small businesses hurt by the pandemic with the help of a $1.17 million federal grant.

Councilmember Raul Peralez in June 2020 launched a 40-person task force to make recommendations to revitalize downtown businesses, including offering free parking, a marketing plan and to-go booze. Peralez could not be reached for comment.

Private developers such as Gary Dillabough have attempted to liven up downtown with art, music and comedy events similar to First Fridays in the SoFA District. 

Dramatic revenue drops

Derrick Seaver, president of the San Jose Chamber of Commerce, said businesses continue reporting stark drops in revenue because of remote work.

“We had conversations with numerous small business owners who were detailing 70-80% of pre-pandemic revenue loss, and that listed work from home policies as a key cause of this drop off,” Seaver said. “We turned the corner on COVID, but we are not back to pre-pandemic rates by any stretch of the imagination.”

Scott Knies, executive director of the San Jose Downtown Association, said business lunches and in-office catering is “missed big time” by downtown eateries.

He said people will return to their offices when they feel safe, which puts pressure on the small business community downtown and extends the recovery period.

Voyager Craft Coffee owner Sameer Shah has three cafes: one downtown at San Pedro Square and two in Santa Clara. The downtown cafe has struggled the most through the pandemic, he said, losing money 13 out of 18 months.

“It’s definitely been tough, primarily because the office foot traffic is missing,” Shah said, adding that his other locations keep busy with residential traffic, which is currently lacking downtown. “I don’t think that office crowd is going to come back the way we all hope.”

But some are hopeful that workers will slowly flock back to downtown, especially as Santa Clara County charts one of the highest COVID vaccination rates in the state. According to Santa Clara County Public Health, 81.9% of people age 12+ have completed their COVID vaccinations.

“I feel pretty confident companies will be encouraging workers to come back into the office,” said David Mulvehill, owner of O’Flaherty’s Irish Pub. “Maybe a little less than pre-COVID, but I think it’s an environment people will want to go back to.”

Contact Lorraine Gabbert at [email protected].