Grocer, ‘high-end’ restaurant sought for downtown San Jose housing towers

SAN JOSE — A grocery store and a restaurant are among the potential options for the ground floor of two downtown San Jose housing towers whose merchant spaces have never had a tenant.

Nick Goddard, a broker with real estate firm Colliers, has begun to scout for tenants to fill about 32,000 square feet of empty commercial space at 188 West St. James St.

“This is a great location, one of the best downtown,” said Goddard, a Colliers senior vice president. “San Pedro Square is right down the street.”

The 188 West St. James towers, which are owned by an affiliate of Machine Investments, do appear to have a good location, said Bob Staedler, principal executive with the land-use consultancy Silicon Valley Synergy.

“These retail spaces benefit from San Pedro Square’s foot traffic,” Staedler said.

Still, tenants in these spaces could face some significant challenges, Staedler warned.

“These spaces will require a huge amount of tenant improvement dollars that need to come from the landlord,” Staedler said. “The market is not strong enough for a tenant to bear the full time and cost of what it would take to make these spaces usable.”

Staedler pointed to high-profile failures of restaurants, such as the abrupt exit and permanent shutdown of Rollati restaurant on East Santa Clara Street in August.

Goddard envisions an array of possibilities for the ground-floor spaces. The commercial spots consist of 20,000 square feet directly beneath the housing units, along with a two-story adjacent building totaling 12,000 square feet.

“A small grocery store would be a great option,” Goddard said. “For lack of a better word, it could be like a bodega.”

A bodega-style grocery store would be similar to the independently owned convenience stores, often family-run, that dot New York City. That sort of grocer could potentially occupy much or all of the 20,000 square feet.

“We could see a cheese, wine, delicatessen sort of establishment,” Goddard said. “The market opportunity for this could be huge.”

The ground floor spaces also could include a beauty salon and nail shop. The two-story building along North San Pedro Street offers significant opportunities, Goddard said.

“This could be a phenomenal place for a high-end restaurant and a bar, looking right over San Pedro Square,” Goddard said. “There would be some incredible uses there.”