San Jose Retail Market Report

Sector outlook is brightening. With an unemployment rate of 2.4 percent in August, San Jose's labor market is outperforming the national average by 130 basis points. The strength of the metro's economy, coupled with pent-up consumer demand stemming from pandemic lockdowns, led to a rise in consumer spending over the past 12 months ending in June. These circumstances are improving the outlook for the retail sector in the Silicon Valley. Although availability has remained relatively steady over the past year ending in June, the vacancy rate in San Jose is at least 80 basis points lower than any other major Bay Area market. The metro's second quarter performance provides additional reason for optimism. During the three-month span, nearly all San Jose submarkets recorded positive net absorption. Specifically, vacancy fell 120 basis points in Santa Clara to 2.4 percent, the lowest rate in the metro, while availability in Sunnyvale-Cupertino dropped by 110 basis points.