Here's a look at downtown SF, its small businesses after the return of Salesforce employees

SAN FRANCISCO (KGO) -- More than a week after some Salesforce employees were told to return to the office at least four days a week, most small businesses in the area say things seem to be improving.

In late September, a week before workers at one of the city's largest employer - Salesforce - were scheduled to return to the office, we asked small businesses to describe life downtown.

"It's been affected a lot because we don't have that much people here and I know we have a lot of 'to-go,' but it's not enough we would like them to come back to work, everybody will be happy about that," said Marcos Quijada, who works at Japan House Restaurant.

"So happy - if they want to come back, at least they can bring the business back, we can pay our employees, our rent, our expenses again," expressed Osman Zughayer of the Oasis Grill.

Salesforce employees came back on October 1, so fast forward to today - it has been a mixture of satisfaction for many and disappointment for a few.

"Most of the building is still empty so we hope they are going to come back to work five days again," insisted Zughayer, a week and a half after some Salesforce employees came back to the office.

But at Japan House Restaurant, which a few weeks ago struggled, Friday had a noticeably large lunch crowd.

MORE: SF cleaned up for Dreamforce but what happened after conference ended? Here's what we found

We spoke again to Quijada.

"We are getting more people right now and I see that there are a lot of people coming out of that building, Salesforce, and I'm so happy about that because we are busy, we are busy very much," he said.

Other small eateries nearby were once again savoring the good times they had before the pandemic.

Most Salesforce employees may be back, but here's another big problem not helping with the recovery of downtown - empty buildings.

All of the empty spaces on a block across the street from Salesforce are listed by Charlie Cutler, a commercial real estate broker.

We found him the next day and asked what gives.

"So this building, we actually just got our first offer from an AI company here this week to lease a whole floor here, said Cutler.

MORE: How leading SF mayoral candidates hope to bring businesses back downtown

Cutler believes things will turn around in the East Cut neighborhood with AI companies being the driving force.

"I've leased over 100 AI companies since 2022 and the reason for that is that the AI world is moving so quickly. Right now, the ability to be here, attend events, meet-ups, hackathons, and rub elbows with other like-minded people, that synergy is extremely important to these young companies," explained Cutler.

Still, according to the commercial real estate company Avison Young, the vacancy rate today in the downtown area is 31% and that's a conservative number.

But what few don't realize, is that over the next five years, 40% of the building loans in the downtown area will expire and for buildings with a high vacancy rate, refinancing with a lender could be difficult.

"After COVID hit and the vacancy rate has gone up, the value has shrunk down and so the loan-to-value ratio which is critical for most lenders, has now become out of whack," explained Mark McGranahan, principal at Avison Young.

Here's an example: the building at 995 Market Street, housed WeWork which occupied 80% of the building. When they left in 2021, it became impossible to lease and the owner defaulted on a $45 million loan.

The building at 33 New Montgomery Street was purchased in 2014 for $146 million. Nearly a year ago, it was listed at $80 million.

While there is still concern about the future of downtown, many who are watching it closely say the hit to commercial real estate will likely be a big opportunity for companies who have long been priced out of the city's downtown, paving the way for a significant and long awaited market reset.