San Jose, California is the biggest city in Silicon Valley, located on the southern tip of the San Francisco Bay. Nicknamed the “Capital of Silicon Valley” when the advent of computers caused it to become a technology hub, San Jose is still a hotbed of technology and tech innovation, with commercial space for rent that is uniquely suited to the industry. San Jose has been selected as the future site of the United States Patent and Trademark Office, slated for completion in 2015, in response to the area’s prodigious innovation and requests for patents. Office space for rent is not limited to high-tech, however; other industries such as law firms, financial institutions, real estate, and business services lease in San Jose’s downtown area and other sectors of the city. Within the city’s 175 square miles are found 1.4 million square feet of retail, an excellent opportunity for retailers that wish to find rental space in an affluent market.
Currently the center of venture capital activity – Silicon Valley captured 41.6% of all US venture capital dollars during the second quarter of 2014. The area has added 8,200 jobs since the beginning of 2014, and has a low 5.3% unemployment rate, compared to California’s 7.4%. Class A vacancies in San Jose are on the decline, with increasing lease activity mostly from technology firms. Silicon Valley as a whole recorded 1.46 million square feet of net absorption, but San Jose showed negative net absorption at the beginning of 2014 due mainly to one large property being vacated. New construction has begun to take off as well, with six million square feet of new projects currently under way, and more planned for the future. San Jose’s downtown in particular has seen a great deal of activity with 7 of 10 of the city’s real estate deals in the second quarter of 2014 taking place here.
San Jose is 48 miles south of San Francisco, and 40 miles south of Oakland on what is known as the Southern Peninsula. The climate is semiarid with an average of 300 days of sun, with temperatures that average between 50 degrees and 70 degrees all year long. San Jose’s downtown has more than 140 dining establishments, and holds outdoor music concerts, farmers’ markets, and holiday ice skating on picturesque San Pedro Square. Art is everywhere in this cosmopolitan town, throughout its many galleries, on local eatery walls, and in the San Jose Museum of Art. The city hosts a Blues Fest with some of the biggest names in Blues music headlining annually. With such close proximity to San Francisco and Oakland, residents and employees in San Jose have many tourist options, when the itch to venture out of San Jose strikes. The area consistently places in high quality of life rankings for United States cities.
The first civic settlement in California, San Jose was established in 1777 by Spanish colonists for the purpose of agricultural support for military installations. Settlers were given animals, seeds, equipment, and a monthly stipend. From this agricultural beginning grew a city that became the center of apricot, prune and grape production, as well as the world’s largest canning and dried-fruit packing center prior to the 1950s. Beginning in the 1950s, the city began to capitalize on silicon, a natural resource vital to the production of semiconductors for high-tech industries. The city became known as “Silicon Valley” during the high-tech revolution, and quadrupled its population between the 1950s to the 1980s. The city’s reputation as a tech hub was cemented with the invention of RAMAC and the hard disk drive by IBM, which had established its headquarters in San Jose. Today, technology companies continue to make their home in San Jose, including Cisco Systems, eBay, IBM, Hitachi, Adobe Systems, Cadence Design Systems, Sanmina-SCI, Maxim Integrated, Brocade Communications, Ericsson, and Xilinx, among many others.
San Jose is the largest city in the nine-county Bay Area, the third largest in California, and the tenth largest in the United States. The population of San Jose was 982,765 in 2012. The residents of the city are more affluent than most Californians, with the median household income at $80,090, which is more than $20,000 over California’s median household income of $58,328 (both figures 2012). Housing costs are high here, as they are in most of the Bay Area.
San Jose’s commercial rental activity has increased in the first two quarters of 2014 due largely to Silicon Valley office and R&D sectors, with second quarter growth increasing 42.5% over first quarter 2014 growth. Construction is coming back slowly since the 2008 recession, and tenant improvements show subtle growth. High rental asking prices are not deterring lease activity. A new retail trend is for companies to seek a prime location and pay top dollar for it, rather than settling for more out-of-the-way spots to save on rent. With rent prices climbing, real estate pundits have been asking the question if another bubble is in the forecast. Most experts believe that this is not the case, as interest rates have remained steady, and demand is coming from both large and small firms.
Prime commercial real estate is found in the downtown area, where companies can join such prestigious firms as Adobe Systems, Acer America, Colliers International, Deloitte, PG&E, and many others. San Jose’s downtown in particular has seen a great deal of activity; 7 of 10 of the city’s real estate deals in the second quarter of 2014 took place here. North San Jose has recently begun a transformation from an R&D community to a livable tech hub, with excellent walkability and plenty of amenities. The city has responded to traffic congestion that came as a result of rapid population growth with easing commuting and regional transit, and plenty of parking. A BART transit rail is under construction for completion in the North San Jose area in 2018. The Caltrain commuter rail and the light rail serve millions of riders countywide.