San Jose has approved a Downtown incentive program includes a two-year business tax exemption for new owner-operators and tenants that lease at least 2,500 square feet of office space for a minimum…
The leasing incentive program, which will go into effect on Jan. 1, includes a temporary business tax exemption for new owner-operators and tenants that lease at least 2,500 square feet of office space for a minimum of four years. The program also includes two free parking spots per 1,000 square feet for the first two years, bringing the potential savings for large businesses up to hundreds of thousands of dollars.
Downtown San Jose’s night and weekend foot traffic has experienced a renaissance over the past two years — recovering to pre-pandemic levels and marking the eighth largest rebound in the nation — according to a University of Toronto Study that tracked activity using cell phone data. According to data from real estate firm CoStar, vacancies in downtown San Jose exceeded 31% through the second quarter of this year, up from 12% in 2019. Return-to-office protocols and the new paradigm caused by COVID-19 have forced businesses to— either by shrinking footprints or seeking higher quality, amenity-rich spaces — prompting the need for incentives to stabilize the downtown market.
San Jose also budgeted $650,000 for its Storefront Grants Program and committed greater resources for beautification and addressing homelessness issues downtown, knowing that no one solution would solve its woes. Along with the cost savings, Mayor Matt Mahan said bringing businesses back downtown would improve the experience for their employees by reducing their work commutes and providing access to all of the amenities at their fingertips.
A study from the International Council of Shopping Centers found that the average office worker spends $195 per week on goods and services. A conservative estimate of the impact of increased leasing activity showed a potential increase of $17 million in downtown spending.
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