To those who’ve watched downtown San Jose navigate a half century of trying to build itself into a regional center, the notion that prosperity is just around the corner is a bit of a punchline.
During the ’80s, a convention center, a luxury hotel, a retail plaza, a sports arena and a handful of highrise office buildings were going to transform San Jose into Silicon Valley’s capital. Then the Gulf War recession hit. San Jose’s socially conservative leadership shut down downtown’s most vital attraction: the club district that brought not-yet-famous bands like Nirvana and Green Day to small stages. The new luxury shopping mall became a data center.
The center of gravity swung north during the Internet boom of the 1990s’ second half. Some economic momentum rebounded after the millennium but the 2008 banking crisis popped that bubble too. By 2013, San Jose was being derided by venture capitalists as a “rust belt” city and San Francisco became a technology talent magnet and home base for high-flying digital brands.
Then came Google, which in 2016 kicked off a buying frenzy of downtown San Jose properties, driving up values and expectations. After spending more than half a billion buying up land and developing plans for a city within a city, Google paused the project in 2023.
San Francisco billionaire Jay Paul made a similar nine-figure investment in 2020 with hopes to build almost 4 million square feet of highrise offices on downtown’s 8.1-acre CityView Plaza. Last month, the developer pivoted to adaptive reuse of the office buildings for a residential and retail remake.
Another active land assembler is Gary Dillabough’s Urban Community group, who with collaborators Westbank and Terrascape Ventures control major chunks on six downtown blocks.
The decade of speculative real estate activity has left parts of downtown fenced and emptied, brightened a bit by murals, activations, orange ping pong tables, block parties and pop-ups but not a real economy. Except for two earlier Jay Paul projects, none of the Big 3’s projects have broken ground, while more focused efforts such as The Fay residential tower overlooking Interstate 280 and Urban Catalyst’s rehab of the former Cinema 12 building have seen completion.
First, the Good News
San Jose’s penchant for chasing shiny objects and enabling magical thinking has left big-ticket projects sitting behind chain link fences. Meanwhile, smaller, entrepreneurial ventures are forging ahead, confirming the value of community-rooted independent players.
Some examples are elegant concept restaurants Eos & Nyx on Second Street and The Pressroom near San Pedro Square. Amongst the city’s coolest spots, they dress up well at night and will serve downtown well if business lunching returns. And then of course, there’s Paleta Planeta at Fourth and Santa Clara Streets and Jackie’s Place on S. First, opening later this month, testaments to the city’s rich tapestry.
Takeaway: Think Big on a Small Scale & Bet on Locals
The Leadership Crises
With the downtown economy still reeling from the shocks of the past decade, it is now undergoing a leadership crisis. District 3 elected Omar Torres 2022 and even before his short tenure was sidelined by a criminal scandal two years later, he had struggled to take leadership on downtown issues. An election is underway to replace him, with a runoff between labor-endorsed Gabby Chavez-Lopez and Mayor Mahan-backed Matthew Quevedo.
Nanci Klein, director of San Jose’s Office of Economic Development and Cultural Affairs, is retiring, and the transition is underway at the key agency overseeing both the arts and development activity in the city.
The Chamber of Commerce was hobbled in late 2020 by community reaction to a racist campaign post and lost both membership and its ability to promote business-friendly candidates. Last year Leah Toeniskoetter was brought in as CEO and has begun rebuilding the venerable institution.
The biggest shock came with Friday’s unexpected announcement: the resignation of Alex Stettinski, CEO of the San Jose Downtown Association—the organization representing all of downtown’s businesses and property owners. His departure comes just two and a half years after he succeeded the longtime executive director that had led the SJDA for more than three decades.
Downtowners had hoped that Stettinski would bring fresh ideas and new energy to a recovering downtown and an organization that had become set in its ways. He proved passionate and moved quickly to reshape the organization and refresh its marketing, but his tenure was undermined by financial challenges, high staff turnover and a breakaway promotions group, Urban Vibrancy.
Downtown business owner Alan “Gumby” Marques has stepped in to fill the slot on an interim basis. A public relations agency has been hired to manage the narrative and Stettinski declined to comment on his resignation.
Falling Dominos in SoFA
One of downtown’s success stories is the SoFA District, a grassroots upstart district that defied city-sponsored redevelopment to create its own identity and become the valley’s coolest commercial district. Partly because of neglect—the former redevelopment agency concentrated its planning dollars elsewhere—it is one of the last collections of shoulder-to-shoulder one-story, century-old commercial buildings with timber bow truss roof structures.
The demolition of the brick Garden City Construction building to make way for The Fay and the deco-era Firestone dealership to give rise to The Pierce began the process of replacing SoFA’s history, at its south edge, with the modernism found throughout the valley these days.
The dominos will likely fall next with the destruction of broadcasting pioneer Charles Herrold’s school 493 S. First St., where a 15-story affordable housing building has been approved. The “Gateway Tower” is a textbook example of tax dollar waste as the biggest recipient of Measure A dollars, as the 220 units will cost $1 million each to build. Voters who voted to tax themselves almost a billion dollars in 2016 for a plan to address homelessness could never have imagined that one project would hoover up so much money and not get built for 13 years. If it’s completed in 2029, it will consume $82 million in from Santa Clara County, $38.5 from City of San Jose, $4 million from the state and $121 million in federal tax credits.
By reenvisioning the failed luxury housing highrise to provide permanent shelter for formerly unhoused individuals at a million a pop, Gateway will join other adjacent voucher-enabled housing and nearby support services. SoFA’s destiny as a concentrated social safety net begs the question of why the wise local housing gods picked some of the city’s most expensive real estate and construction methods to carry out the will of the people, more than a decade after they generously opened their checkbooks for Measure A.
Downtown Diary will be continued intermittently, online and in these pages. Metro editor Dan Pulcrano has been a part of the San Jose Downtown Association and the SoFA District since the beginning, and doesn’t pretend to be objective on these subjects.
