San Jose's commercial real estate market is experiencing notable shifts, particularly in retail and affordable housing sectors. According to Marcus & Millichap's Q3 2026 report, the retail vacancy rate in San Jose is expected to decrease to 4.4% as demand from experiential tenants, such as fitness operators, continues to rise amid a limited development pipeline. This trend indicates a tightening retail market in the region, reflecting broader changes in consumer preferences and retail strategies 4.
In the affordable housing sector, Bedford Affordable Housing has made a significant acquisition by purchasing the 220-unit Avana San Jose for $85.5 million. This move is part of a broader strategy to convert market-rate housing into income-restricted units, addressing the ongoing demand for affordable housing in a market where new supply is limited 3.
Additionally, the city of Santa Clara is making strides in increasing housing supply with a proposed development at University Station. The planning staff has recommended approval for a 408-unit project that aims to replace an aging office campus. This initiative underscores the region's commitment to enhancing housing availability, particularly near transit hubs, which is crucial for accommodating the growing population 1.
On the industrial front, Lift Partners has acquired a vacant 81,000 square foot former Amy's Kitchen plant in San Jose for $18.35 million. This purchase highlights continued investment in the industrial sector, with a focus on value-add opportunities in a competitive market 2.
Overall, these developments reflect a dynamic real estate environment in San Jose, characterized by a tightening retail market, a strategic push for affordable housing, and ongoing industrial investments. As these trends evolve, they will shape the future landscape of the San Jose commercial real estate market.