Market Report
San Jose Retail Market Report
3Q 2026
Compressed Pipeline Lays Groundwork
for Vacancy to Decline Further
Experiential retail leads leasing amid limited development. With local construction remaining the most subdued among major U.S. markets for a second consecutive year and space absorption improving in 2026, vacancy is expected to face further downward pressure. Leasing activity remained steady during the year ended June, supported by long-term commitments of up to 15 years for shopping centers in Milpitas, South San Jose, and Morgan Hill. Activity-oriented concepts, including pickleball courts, bowling alleys, fitness centers, and sporting goods retailers, accounted for many of the larger leases. At the same time, similar tenants also targeted well-located space in Sunnyvale and Santa Clara.
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