San Jose Retail Investment Forecast
Local Economy and Retail Market on Path to Recovery;
Return of Tech Workers Presents Potential Tailwinds
Elevated incomes help push retail fundamentals closer to pre-pandemic levels. At $129,800 annually, the median household income in the San Jose market trails only San Francisco entering this year. Although the elevated cost of living in the South Bay erodes some of the spending power among local residents, most households have sufficient discretionary funds to drive retail sales higher. Consumer spending is expected to finish this year at 23 percent above the year-end 2019 level. Achieving that feat partially hinges on the return of employees to offices on a permanent basis. Both Google and Apple, along with many smaller firms headquartered in the South Bay, have indefinitely delayed a return to offices. Regardless, the Silicon Valley giants have shown little impetus to transition away from in-person work, unlike many of their San Francisco counterparts. Furthermore, the spread-out nature of the area is attractive to employees that can work a hybrid model, raising the number of consumers. Combined with low development, both vacancy and rent will improve this year.