San Jose posits sweeteners to attract businesses Downtown

Lease incentives include waiving business taxes and parking fees for two years

<p>A photo illustration of San Jose Mayor Matt Mahan (Getty)</p>

A photo illustration of San Jose Mayor Matt Mahan (Getty)

Who doesn’t like having to pay business taxes or parking?

The City of San Jose wants to woo tenants who begrudge such expenses to its downtown by offering leasing lures slated to start next year, the Silicon Valley Business Journal reported. The plan is scheduled to go before the City Council on Oct. 1

City officials say the proposed incentives could save companies moving to Downtown tens of thousands of dollars in forgone business taxes and parking expenses. 

It could also breathe life into a district where leasing activity has slowed, deal sizes have withered and businesses have relocated to trendy commercial areas such as Santana Row

The plan calls for offering new Downtown office tenants, or owner-occupiers, two years of no city-business tax and free parking. Afterward, regular expenses would resume. 

“We’re doing what we can to entice office users to lease or buy commercial space Downtown,” San Jose Mayor Matt Mahan told the Business Journal.

The office vacancy in Downtown San Jose has shot up to 31.5 percent since a broad shift to remote work, according to CBRE. As many as 3 million square feet that once teemed with workers now sit empty.

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While Downtown nightlife has raised a glass since the pandemic, foot traffic has lagged during office business hours, according to the mayor.

The cost of the business tax forfeiture to lure businesses into Downtown could be around $120,000, city officials estimate. But the loss could be offset by more workers spending money near their offices at local businesses.

“That is much-needed revenue for small businesses that can’t survive on the night and weekend traffic alone,” Mahan told the newspaper.

“If we want to have a vibrant restaurant scene Downtown, we want coffee shops that survive and those types of amenities,” he said. “We’re going to need to have consistent foot traffic and that means a healthier mix of office workers and residents.”

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To be eligible for the Downtown sweeteners, a new office tenant must lease at least 2,500 square feet for a minimum of four years. Businesses in Downtown and lease renewals or expansions won’t be included.

Eligible companies would receive two free parking permits for every 1,000 square feet of leased offices. The permits could save businesses between $100 and $125 per employee per month in public garage fees.

— Dana Bartholomew

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