HSA Cuts Eight Years From The Wrap’s Lease

The Wrap’s 15-year lease on its Mt. Auburn Street location has been terminated and replaced with a shorter lease that expires in October of 2003.

Harvard Student Agencies (HSA), which owns the Mt. Auburn Street building, utilized a provision in the original lease to terminate the contract, set to expire in 2011, and replace it with a new two-year lease.

Officials from HSA refuse to comment on whether The Wrap will be granted a new lease in 2003 to stay at its current location.

“Seven years versus 15 years, that can be frustrating,” said John Pepper, CEO of the Stellar Restaurant Group—the legal name of corporation that runs The Wrap.

The restaurant’s original 15-year lease was purchased in 1997 from the previous tenant, Wrap Culture. The lease, which spanned from 1996 to 2011 was subdivided into three terms of five years, the first of which ended in October 2001. The lease was not renewed for a second five-year term.

“[Not getting a new lease in 2003] would be one of the biggest stumbling blocks we’ve come to” said Adam Liebman, one of the Wrap’s co-founders and its vice president of real estate.

Both Liebman and Pepper explained that the Harvard Square location is the most successful of The Wrap’s seven locations. All seven stores are located in the Boston area.

“It’s the number one store, and its ahead of number two by far,” said Pepper.

Both HSA President Bradley J. Olson ’03 and HSA General Manager Robert Rombauer called The Wrap an “excellent tenant.”

“We look forward to continuing our positive relationship with them in the future,” Olson said.

He refused, however, to comment on why HSA only granted a two-year lease to The Wrap. Additionally, he would not say whether HSA—including its Let’s Go division that already occupies the space above the store—was seeking additional space.

“I would restate that all agreements and negotiations between HSA and its lessees are confidential,” Olson said.

Both Olson and Rombauer have the authority necessarily to make a lease contract. All major contracts are brought before the entire HSA Board of Directors—composed of students, alumni and University officials—or one of its sub-committees.

Seeking a New Location

As of now, the Wrap will have to leave by October 2003 unless between now and then an extension or a new lease is granted.

Pepper said he has “faith” that HSA and The Wrap will be able to negotiate a new lease in 2003, but that the company would be irresponsible not to look for alternate locations in case a new lease is not offered.

“If we can stay, we’ll stay. Otherwise we’ll try to move as close as possible to the old location in order to keep customers happy,” Liebman said.

And Pepper said The Wrap has been seeking new locations nearby, but could not reveal the exact locations.

Liebman said that there were huge costs involved in relocating, noting that new permits and a new lease would be needed.

He also said there would be the cost of temporarily losing customers who did not know where The Wrap had moved, especially the many customers who come only during the Head of the Charles weekend.

“If we have to leave, we might not be able to find a new space,” Pepper said. “Harvard Square is tough.”

Pepper said some of the rents set in recent leases on Harvard Square locations are higher than what The Wrap would sign. He added that in high profile areas such as Harvard Square many companies seek to have a presence as a marketing tool for their brand names. These companies often pay over market price for space, making it harder on smaller businesses.

Pepper also said that if The Wrap needs to move, there would likely be a gap period between the closing of the current store, and the opening of a new one. He said The Wrap would try to minimize the length of this gap.

Relations With Students

Both Pepper and Liebman said that a strong relationship with Harvard students has always been a key to their success on Mt. Auburn Street. Last Friday, The Wrap donated to IMPACT 100 wraps to feed students attending the Miss Harvard pageant.

Pepper added, “we have a lot of student support, including the students in the HSA. They are good customers.”

Students expressed a range of emotions from shocked to indifferent at the news that The Wrap might lose its Harvard Square presence.

“I would be completely ruined [if the Wrap left],” said Daria J. Hinz ’04.

Vonda M. de la Manta ’05 also said she liked The Wrap and would be upset by its departure, citing its good food at a good price as reasons for her patronage there.

But not everyone was so moved.

“It’s not that important to me; there’s lots of other places to eat,” said Hye S. Kim ’03.

‘Difficult Lessons’ Learned

Pepper said that they were surprised when the original lease was terminated. He mentioned the complexity of The Wrap’s 50-page leases, saying “none of us who aren’t lawyers truly understand what the legal documents say.”

Neither Pepper nor Liebman would comment about all the details of the lease termination and renegotiation.

“We don’t feel comfortable talking about it because we don’t know what the repercussions are,” Liebman said.

Liebman also said that tenants were often at a disadvantage because leases are filled with clauses by which a landlord can evict a tenant at any time. Pepper added that the livelihoods of many employees were at stake.

Rita Tobias, the owner of The Tennis and Squash Shop also located in HSA’s Mt. Auburn Street building, said that her store would be unaffected by any decision of HSA to terminate The Wrap’s lease.

“We’re like Harvard. This store has been here since 1920. Our lease is long term,” Tobias said.

According to its CEO, ultimately The Wrap came to appreciate the importance of understanding all the intricacies of a lease contract.

“We’ve learned a very difficult lesson”, Pepper said. “I’m used to working on the basis of trust and a good old-fashioned hand shake.”