SAN JOSE — Visits to downtown San Jose have soared over the last year, providing a welcome counterpart to the forbidding economic trends that bedeviled the Bay Area in the wake of the coronavirus pandemic. Oakland also saw a jump in visitors, while San Francisco continued to stumble.
San Jose’s 28.2% jump in downtown visits ranked 8th best in North America, according to a new School of Cities report produced by the University of Toronto, which analyzed cell phone data to determine visits to 64 downtown districts in the U.S. and Canada.
Visits to downtown Oakland rose 20.6%, giving Oakland the 16th-best increase among the cities that were surveyed during the 12-month period that ended in March, according to the report.
The increase in downtown Oakland “is contrary to the narrative about how Oakland has been struggling,” said Stephen Baiter, executive director of the East Bay Economic Development Alliance. “Green shoots are appearing in downtown Oakland.”
San Francisco’s visitor activity, however, showed a nosedive, the university report found. Activity dropped by 21.6% and may reinforce the perception that a “doom loop” scenario plagues the city’s downtown. San Francisco’s performance was the worst of the cities in the University of Toronto report.
The economic “doom loop” scenario has surfaced for San Francisco because of the downtown’s cycle of a retail exodus, crime woes, office and hotel foreclosures, and office vacancy rates that have soared to record levels.
The fading of the coronavirus-linked business shutdowns that devastated the Bay Area and California economies may have helped to spur business formations in San Jose and elsewhere around the state.
“The pandemic had a bit of a chilling effect on new businesses,” San Jose Mayor Matt Mahan said. “Now that we’re past that, we are seeing people from all over this city willing to take that leap and start a new business or move from a garage to a storefront.”
In San Jose, the increase in visits to downtown may be partly explained by an array of unique businesses that have sprouted in the urban core of the Bay Area’s largest city, Mahan said. “We are seeing a lot of entrepreneurs who are willing to take risks again,” Mahan said in an interview at a recent downtown event.
Mahan’s efforts to tackle some basic problems that have afflicted downtown San Jose in the wake of the coronavirus appear to be helping to make the city’s urban core more attractive and likely to entice visitors, said Nick Goddard, a senior vice president with Colliers, a commercial real estate firm.
“Mayor Mahan’s actions on homelessness and crime in the downtown has made a marked difference in cleanliness and safety,” Goddard said.
San Jose’s relatively strong performance suggests the South Bay city also benefits from a favorable comparison to San Francisco, said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
“Whether wrongly or rightly, San Jose’s reputation hasn’t taken the same kind of hit as San Francisco,” Hancock said. “Recent polls showed a reluctance on the part of many to frequent San Francisco’s downtown. San Jose is still perceived to be clean and safe and more readily accessible.”
Goddard says he sees a growing volume of anecdotal evidence that a rebound is underway in downtown San Jose, especially in terms of visits to the urban core.
“All of our downtown food and beverage operations are way in excess of their pre-COVID levels,” Goddard said.
Several restaurants have opened recently in the downtown, noted Leah Toeniskoetter, president of the San Jose Chamber of Commerce.
“San Jose’s attractiveness as a destination for evening entertainment is clear,” Toeniskoetter said.
More are slated to open. Another unique venue, an ax-throwing site called Unofficial Logging, is preparing a new space downtown.
Oakland, meanwhile, is being buffered by downtown housing, said Baiter. Plus, activity is increasing for some hotspots in downtown Oakland such as the hip and bustling Uptown district.
“Important gathering places like the Fox Theater and the Paramount Theatre are having more shows of late,” Baiter said. “That is definitely bolstering activity in downtown Oakland.”
The gains in activity for San Jose, Oakland, Los Angeles, San Diego and other California cities topped the overall trend nationwide, the university stated.
“Overall, the median rate of change is 9.3% over the year, meaning that the median downtown in the U.S. and Canada’s largest metropolitan areas are gradually seeing more activity,” the University of Toronto report stated. “Fifty downtowns are in an upward trajectory, while just 14 are trending downwards.”
San Jose’s big one-year increase in visits as measured by cell phone activity arrives on the heels of a report released in October 2023 that determined San Jose was enjoying one of the strongest recoveries from the economic collapse that occurred due to the government-ordered shutdowns.
As of October 2023, downtown San Jose visit activity had recovered to 96% of its pre-coronavirus level. That was the third-best in the nation, the University of Toronto researchers reported at that time.
Mayor Mahan pointed to other one-of-a-kind ventures as signs that downtown San Jose is gaining traction.
“You see the Downtown Food Hall from CloudKitchens that can bring in nearly 30 companies and provide low overhead costs for restaurants and restaurateurs to provide their foods and beverages,” Mahan said. “We are giving them a runway to see if they can get their revenue up to the point they can pay rent down the road.”
Mahan commented after participating in the grand opening in downtown San Jose of Purple Lotus, which has become the first cannabis store to open in a commercial district in the South Bay city and the first one outside an industrial zone.
“If San Jose is going to continue to be a place that plays host to entrepreneurship and innovation, we have to keep pushing to lower barriers to entry,” Mahan said.
