San Jose's commercial real estate landscape is demonstrating notable resilience, particularly in the industrial and office sectors. Recent developments indicate a robust demand for industrial space, alongside a resurgence in office leasing as companies adapt to post-pandemic realities.
According to The Registry, a flex industrial property in North San Jose has been listed for $15.5 million, underscoring the ongoing demand for industrial space in the region. Additionally, construction is currently underway on a significant 488,000 square foot Amazon distribution hub in Milpitas, which is expected to add nearly 10% to the city's warehouse inventory. This comes as industrial vacancy rates in San Jose have fallen to 4.6%, reflecting a strong market driven by e-commerce and tech-related logistics needs 13.
In the office sector, Silicon Valley has reached a post-pandemic high in leasing activity, with 4.9 million square feet leased in Q3 2026. Major tech firms are leading this surge, indicating a recovery in the office market, particularly in San Jose, where companies are expanding their footprints amid a tightening availability of office space 4.
Investment activity in the tech sector continues to thrive, as evidenced by the acquisition of IBM's former Almaden campus by a Blackstart Digital affiliate. This site is set for redevelopment into a tech and R&D hub, aligning with the broader trend of transforming existing properties to meet the evolving needs of the tech and data center industries 2.
On the residential front, San Jose's planning officials have made strategic adjustments to prioritize residential construction at the Cambrian Park Village site. Kimco Realty has been allowed to shift its focus from commercial to residential development, significantly reducing upfront costs from $60 million to $25 million. This move is crucial in addressing the ongoing housing demand in the area 5.
Overall, the San Jose metro area is navigating its commercial real estate challenges with a focus on industrial growth, office market recovery, and essential residential development, positioning itself for continued success in the evolving landscape of commercial real estate.