First, we need to stop competing with malls on malls' terms. Going down that road has killed more downtowns than it has helped.
And we need to stop catering to the needs of suburban residents. Yes, we can make DTSJ attractive to suburbanites, but that will only come with time.
Downtowns need (a) residents, (b) workers, (c) a balance between the two, (d) and to be a comfortable place to just be and just go outside for a walk.
Look at many of the great metros of the world. Yeah, there's the given skyscrapers and towering financial districts; they're impressive and look great on a post card or as part of a skyline. But so much life is found in shorter neighborhoods, 3-10 stories intermixed, with narrow streets and pedestrian paseos forming "outdoor rooms."
But SJ political leadership has been so focused on long-term visions that it has generally ignored that great places tend to be built incrementally, made great by generations of buildings and residents and businesses. Yes, those big anchors--think Whole Foods on the Alameda--help, but they're just the inflection point, the signal that it is now safe for bigger investors to come in; they are not the underlying changes that got us to that point.
Once we try to master plan an area or otherwise hold it static, once we prevent adaptation over time, we get places that lose their charm and luster.
Santa Row is a nice simulacra of a european walkable district, sure. But, had it been placed downtown it would have been a walled garden of faux-urbanity, disconnected from the rest of the fabric of downtown. Like a black hole, it would have sucked up a lot of energy and left a no-man's land around it.
If anything, having it down W San Carlos rather than in downtown is better for downtown. It can serve as a secondary node between the two we have an obvious corridor to focus on and develop.