San Jose, CA Retail Market Report Q3 2026

Absorption Runs 5.1x Deliveries; Vacancy Compresses 65 bps

Demand

San Jose posted net absorption of -66K SF in Q3 2026, against -722 SF in the same quarter last year. Vacancy is 3.9%, 65 bps tighter than Q3 2025. Moffett Park is the tightest submarket at 0.0% vacancy; Morgan Hill leads rent growth at +1.6%. Trailing-12-month absorption of 573K SF compares with -165K SF a year earlier. Asking rent of $41.53/SF is up 0.6% year over year and within 1% of the Q1 2026 peak of $41.68/SF.

Supply

San Jose delivered 5K SF in Q3 and 113K SF over the trailing twelve months (+10% versus the prior TTM period). Space under construction equals 0.1% of inventory, concentrated in San Benito County at 3.6% of its stock. Annual deliveries peaked at 1.25M SF in 2008. Q3 deliveries were less than half of last year’s 33K SF. The 84K SF pipeline equals about less than one quarters of absorption at the trailing pace.

Investment Market

San Jose recorded $0.7B in sales over the trailing twelve months, -4% against the prior TTM period; Q3 accounted for $318M. The high-water mark in this series is $1.4B in 2022. Q3 volume is 2.3 times the prior four-quarter average. Read volume as directional.

San Jose cap rates average 6.01%, up for 27 straight quarters. Pricing sits at $506/SF, higher for 2 consecutive years.