Japanese Firm Buys Property for Downtown Office Tower

Shinryo California Inc., the U.S. real estate investment branch of a Japanese mechanical engineering company, bought a vacant downtown parcel for $8.25 million Thursday and announced plans to build an office tower.

The 55,000-square-foot parcel is bounded by 2nd and 3rd avenues and A and Ash streets. Gascon Mar Ltd., a San Diego development firm, assisted the Japanese company in the purchase from Toronto-based Manufacturers Life Insurance Co.

The transaction was the second major acquisition of downtown real estate by a Japanese company within a week. On Oct. 12, the Minami Group--a Tokyo conglomerate and a worldwide hotelier--purchased three downtown blocks, including the historic El Cortez Hotel, and announced a $250-million plan to renovate the landmark and build four, mixed-use towers in a joint venture with Grosvenor Industries, a San Diego developer.

Although no formal agreement has been reached between Shinryo and Gascon, sources close to the deal say it is likely that the two will jointly develop the high-rise.

During a telephone interview Thursday, Allan Mackenzie, a Gascon principal, said his firm “will have a continuing association with (Shinryo), but I can’t be more specific about our role.”

Shinryo is primarily interested in developing an office tower, perhaps, with limited retail space, Mackenzie said. He did not rule out the inclusion of residential space, but said it would be unlikely.

“No formal plans have been drafted yet,” Mackenzie said. “All I can say is that the previous owners (of the site) had plans to build a 22-story office tower approved by the city. We anticipate doing something substantially similar to that.”

Indeed, Manufacturers Life Insurance Co. razed the Ticor Title building that stood on the site a few years ago to make way for its proposed office tower, said Paul Lafrenz, a broker with Coldwell Banker who represented Shinryo in the transaction. But unfavorable market conditions at the time discouraged Manufacturers Life from proceeding, he said.

About six months ago, a business associate introduced Gascon Mar Ltd. to Shinryo officials, who were seeking to invest in their first California real estate venture. According to Mackenzie, Shinryo is a private, Tokyo-based mechanical engineering company. Shinryo California Inc., the company’s real estate investment branch, is based in Los Angeles.

In San Diego, Gascon is developing a 30-acre commercial park on Otay Mesa and has built a 100,000-square-foot industrial park in Sabre Springs. The San Diego firm, with 20 employees, has developed commercial projects in Los Angeles and numerous commercial and residential projects in Riverside.