The retail buzz is due, in part, to the relatively small amount of specialized commercial real estate space dedicated to selling goods and services.

"A shopping center needs to be on a site that has 25,000 cars a day going by in front of it. It's also a single-story product. Retail shoppers are not used to going up four stories to buy things. What this means is there is a small amount of supply and an ongoing demand," said Randol Mackley, a principle with the Retail Real Estate Group in Santa Clara.

"You've got a a tremendous amount of investment capital being hurled at the industrial and office sector but not at retail so we didn't see a lot of retail being built. There's a lot of financing for retail, unfortunately there's just not a lot of retail land available," Mr. Mackley added.

As well as helping to boost or stabilize rents, the supply-demand equation has helped keep retails sales strong.

During boom times, retail sales in Santa Clara County rose from $14.4 billion in 1997 to a peak of $19.8 billion in 2000 before dropping back to $17.9 billion in 2001. Last year, however, retail sales were up again to $18.4 billion, according to Sacramento-based California Retail Survey.

With Silicon Valley's unemployment above 8 percent it helps that those who are working punch clocks at companies paying the highest incomes in the nation.

Last year, San Jose topped the list of metropolitan areas with the highest annual disposable income per household in Sales & Marketing Management's 2002 Survey of Buying Power. Last year, San Jose's median "EBI" (effective buying power or gross annual income minus taxes) or disposable income, was $67,504, compared to $57,494 for San Francisco (No. 5), $55,273 for Oakland (No. 8) and $53,459 for Santa Cruz (No. 10), according to the magazine survey which uses data crunched by SiteReports.com, a service of a San Diego-based market researcher, Claritas Inc.

Retailers also like Silicon Valley's collection of affluent neighborhoods that surround shopping centers.

Right now, the median EBI in the 95041 ZIP code, which includes Cupertino's Vallco Fashion Park is $80,041; the Stanford Shopping Center's 94304 ZIP code area has a median $63,568 EBI; the 95050 ZIP code around Valley Fair has a $51,486 EBI; and the 95128 ZIP code area surrounding Santana Row yields a $49,233 EBI, according to Claritas' SiteReports.com.

During the technology boom, Silicon Valley spread sudden wealth from technology stock market investments and technology company incomes and perks. Wise investors who managed their returns well often plowed their returns into the area's other relatively hot real estate market -- housing.

During the tech boom, the California Association of Realtors reported that the percentage of stock market proceeds used in home purchases rose as high as 23.9 percent in the San Francisco Bay Area.

As the tech boom waned, the housing market also fizzled, but many home owners escaped the economic downturn relatively unscathed thanks to nearly a decade of residential real estate equity growth.

The recession officially began in March 2001 when the median price of homes in Santa Clara County was $565,000. By the recession's end nine months later in November that year, prices had slipped to $498,000. This year, the latest July figures reveal the median price has returned to the $565,000 level at the onset of the recession, according to Richard Calhoun, owner broker of Creekside Realty in San Jose.

Record low mortgage rates have allowed many home owning households to increase their disposable income by tapping that equity with record levels of cash out refinance loans and second mortgages.

In California and much of the nation, economists say the down turn has been cushioned by equity tapping and still more buying in the housing market, which some experts say is now the linchpin of the New Economy.

"Property values have maintained themselves, so many were in a position to ride out the recession and they've been able to do it for a period of time. So I think that has led some people to be fairly confident. Large amounts of equity in their homes have allowed them to have the ability to maintain some of their buying power," said Jim Cunneen, president and CEO of the San Jose/Silicon Valley Chamber of Commerce.

Despite all the good news, the retail business isn't what it used to be.

The city of San Jose reveals two years of first quarter dip in general retail sales taxes. First quarter retail sales taxes peaked at almost $6.6 million during the first quarter of 2001, but dropped to $5.8 million during the first quarter this year, the latest figures available.

Claritas also reveals San Jose households have also lost a few thousand dollars in spending money as the median EBI in 2003 has slipped to $63,543 from $67,504 last year.

"Spending patterns show people are optimistic, but compare our market to other markets around the state and retail sales would not compare favorably. The downturn has hurt us more than other parts of the country as well," said Mr. Cunneen.

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