SAN JOSE — RH, once known as Restoration Hardware, has struck a deal to open a new outlet store in San Jose, a leasing transaction that will fill up a large and empty retail space.
The upscale home-furnishings, luxury retailer and hospitality company has leased the site of a shuttered Big Lots! store in south San Jose, according to David Taxin, partner with Meacham Oppenheimer, a commercial real estate firm.
1832 Hillsdale Avenue in San Jose, location of a future RH Outlet store site, as seen on March 12, 2025. (George Avalos/Bay Area News Group)
An opening soon and recruiting notice is visible at a future RH Outlet store site at 1832 Hillsdale Avenue in San Jose, as seen on March 12, 2025. (George Avalos/Bay Area News Group)
RH’s deal to establish an outlet store is a reminder that some big-box retail spaces that were long empty are attracting a new crop of tenants.
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In 2024, Vallarta Supermarkets signed a lease at The Plant shopping center in San Jose that will enable it to grab some of the space that was once occupied by Toys ‘R Us and Babies ‘R Us.
Earlier this year, Hobby Lobby opened a new store in San Jose on Almaden Exressway, taking over a Bed Bath and Beyond space.
Sports Basement leased a large site in the same building where Hobby Lobby is operating. Barnes and Noble vacated the space.
“Certain retail segments are doing well right now, such as discount-type stores,” Taxin said. “RH is planning a specialty outlet store that is low cost.”
The numerous vacancies for sites that were once occupied by big-box retailers have created more favorable rental rates.
“Rents have dropped a bit, which gives retailers a chance to expand at a lower cost than before,” Taxin said.
RH leased 20,000 square feet at 1832 Hillsdale Avenue at the corner of Camden Avenue in San Jose, said Taxin, who arranged the rental transaction.
In the Bay Area, RH Outlet operates stores in Pleasanton, San Rafael and Vacaville, according to Google Maps.
The RH Outlet stores are magnets and destination retail sites, in Taxin’s view. Taxin believes the RH San Jose Outlet will be a big-time draw.
“I’m sure it will be a very busy store,” Taxin said. “People drive from all over to go to these outlets. People from Santa Clara County and the Peninsula will go to the RH outlets in Pleasanton and Vacaville.”
As of November 2024, RH operated 38 RH Outlet stores and 71 RH Gallery stores, as RH reported in a regulatory filing regarding its third-quarter financial results.
“Our outlet stores serve as a key part of our reverse logistics platform and provide an efficient means to sell primarily returned merchandise and, to a lesser extent, discontinued and overstock merchandise,” RH stated in a regulatory filing.
RH is also expanding into the resort business, as indicated by its purchase of a Wine Country property.
In 2022, an RH affiliate paid $25 million to buy a historic Napa Valley resort property, underscoring the retailer’s gambit to diversify beyond its core business of upscale home furnishings.
A winery, guest house and residences are being planned for the 857-acre Napa Soda Springs property, according to information that RH Chief Executive Officer Gary Friedman provided in 2022 to Wall Street analysts soon after the purchase occurred.
As for the just-leased San Jose site, RH is eyeing the first half of this year to open the new outlet store, according to Taxin.
Signs posted at the future RH Outlet retail site suggested the retailer is already in hiring mode for the new store.
“Explore open roles at our new San Jose outlet,” the signs state. “We’re looking for a few good people who don’t know what can’t be done.” The sign also states that the San Jose outlet store will be “opening soon.”
