Homes and Offices : Quake Expected to Jolt Real Estate Market

The earthquake that rocked the San Francisco Bay Area on Tuesday afternoon is likely to cause severe short-term upheavals in the region’s residential and commercial real estate markets while analysts sort out the depth of the building damage.

Real estate experts said Wednesday that ripple effects from the devastating quake could range from canceled sales and leases on homes and office buildings to lowered property values and a pause in new investment.

At a minimum, pending transactions are likely to drag on much longer than expected as buyers reevaluate their offers and property owners seek out and repair the damage, real estate specialists believe.

The quake’s devastation was especially severe in an elegant residential area in San Francisco known as the Marina, near Fisherman’s Wharf, which was ravaged by fire and structural damage. But buildings throughout the Bay Area are now suspect, experts say.

“Property values will definitely go down, especially in the Marina,” said David F. Ravetti, a real estate broker for Red Carpet. “I never thought that would happen in San Francisco.”

Raymond Woo, a real estate investor in San Francisco, said the quake was a major reason he has shelved plans to sell several residential properties even though they sustained only minimal damage. He now plans to rent the properties until the market settles down.

“I think the situation is similar to the stock market,” Woo said. “In the short run, real estate values are going to drop 5% to 10% before they rebound again next spring.”

The quake’s devastation could give prospective Bay Area home buyers--particularly out-of-staters especially sensitive to earthquake dangers--second thoughts about moving to California.

“I think you’re going to have a short-term buyers-regret syndrome,” said Kenneth Leventhal, an owner of a Los Angeles real estate consulting firm that bears his name. “It’s like a disease that will get cured in 60 days.”

And if history repeats itself, the quake will be the last straw for others. “In every quake, you get people who leave California and go back to Oklahoma, saying: ‘This is my last earthquake,’ ” Leventhal said. “I don’t know if that’s going to be two people, 200 or 2,000.”

The impact on commercial real estate is likely to be less traumatic, particularly in downtown San Francisco, where office high-rises withstood the quake without major visible damage.

But older office buildings, as well as those near damaged freeways and bridges, may not be in such good shape, analysts say. “This may force down the rents on older buildings and raise them on newer ones,” said Robert Gardner, partner in Robert Charles Lesser & Co., a real estate consulting firm in Beverly Hills.

“I would guess that of 200 leasing deals under way, maybe two or three or four would fall out of bed because of this,” said Kirk Usher, a real estate broker for Cushman & Wakefield in San Francisco.

Nevertheless, the quake is expected to place at least a temporary hold on commercial investment as the dust settles and damage is assessed. “There is going to be some pause in the appetite for commercial investment,” said Hugh E. Reams, vice president of LaSalle Partners, a Chicago-based real estate investment firm.