Office and retail vacancies offer lifeline to San Jose small businesses

As office space remains vacant across the country and in San Jose, small business owners see an opportunity for growth.

Mauricio Mejia, owner of Punch King Fitness, said the vacancies allowed him to take up space at a fraction of the cost.

“Other retail spaces offer deep discounts,” Mejia said. “They’re taking 60 to 70 percent off because they’d rather take something than nothing, because it affects the value of their spaces.”

Retail space in San Jose sits at 7 percent, according to city officials.

The owners of the building where Punk King is located are offering space at a discounted price to prevent tenants from moving out. It’s a decision Mejia is grateful for because sometimes he struggles to pay high rent.

“When these guys are trying to get financing or refinancing their properties and the banks come and see all the empty spaces, the banks also become unsure of what’s going on with the property,” Mejia said.

San Jose city officials said they remained optimistic about a turnaround as small stores and businesses set up shop.

However, two large downtown properties remain vacant, contributing to 31% of office vacancies in San Jose.

The Jay Paul building at 200 Park remains empty despite heavy marketing of the property.

“(It’s) not leased yet, but they’re talking to some people,” said Nathan Donato-Weinstein, downtown director for the city’s economic development department.

The 200 Park building offers nearly one million square feet of office space.

Less than 3 kilometers away, the Platform 16 building also faces challenges. Construction on the more than 1 million square foot building has been halted.

Additionally, plans to build City View Plaza, across from 200 Park, have also been halted. It’s a trend Donato-Weinstein says she’s noticed in Silicon Valley.

“We have a high office vacancy rate throughout Silicon Valley,” he said. “So I think the developers are watching this closely.”