San Jose's real estate market is currently navigating a complex landscape characterized by rising rents in the multifamily sector and challenges in the office market. According to IntellCRE, the multifamily rent growth in San Jose has reached 3.39% as of May 2026, driven largely by a constrained supply of new apartments. Only 283 new units have been completed during this period, which is contributing to upward pressure on rents as demand remains strong.
The limited new apartment supply is underscored by significant recent sales in the multifamily sector. The sale of the 312-unit One South Market tower for $176 million illustrates this trend, with the price per unit being approximately 46.5% above the South Bay average. This sale reflects robust demand in San Jose's multifamily market, aligning with the overall trend of limited new apartment completions and suggesting a competitive rental environment 3.
In contrast, the office market in San Jose is facing notable challenges. The North San Jose tech campus leased to Archer Aviation has defaulted on an $80 million loan, highlighting vulnerabilities in the office sector as companies grapple with financial pressures 2. This situation is indicative of broader trends within the commercial real estate sector, where some tenants are struggling to meet their financial obligations.
Meanwhile, the hospitality sector in San Jose is witnessing significant investment aimed at enhancing facilities and attracting corporate groups. Stanford Hotels has recently completed a multimillion-dollar overhaul of the Hilton Santa Clara, which is expected to boost occupancy and revenue in this crucial sector for the local economy 1.
Overall, while the multifamily market in San Jose shows strong demand and rising rents, the office sector is contending with financial difficulties that could impact its recovery. As the market continues to evolve, stakeholders will need to navigate these dynamics carefully to capitalize on opportunities and mitigate risks.