Japanese investors, who gobbled up prime downtown...

Japanese investors, who gobbled up prime downtown real estate properties in Los Angeles and other major cities during the past two years, are making smaller deals in Orange County and the South Bay areas, according to a survey by Landauer Associates, a real estate consulting firm.

The shift is occurring, the study said, because new downtown properties are in short supply--more than 80% are already owned by foreign investors, mostly Japanese. Secondly, more non-institutional Japanese investors are coming into the market.

The result is that Japanese buyers are looking at the Midwest, Chicago in particular, and other second-tier metropolitan cities like San Diego; Seattle; Atlanta; Raleigh, N.C.; Indianapolis, and Norfolk, Va. Another change is in the size of the deals--now in the $2-million to $10-million range, down dramatically from the $25-million-plus purchases by the Japanese in 1985 and 1986, Laudauer said.