Rent Pay Lapses in Watertown

Harvard’s brief stint as a landlord in Watertown has, so far, been less than successful.

Two major tenants of Watertown’s Arsenal Complex, a 30-acre plot which Harvard purchased for $163 million last year, are in conflict with the University over their leases.

In early February, consulting firm Arthur D. Little—which rents more than one-third of the Arsenal Complex’s approximately 750,000 square feet of space—declared bankruptcy.

Little is currently trying to get out of its lease with Harvard, according to an individual familiar with the situation.

The ultimate ability of Little to change the terms of its lease and the compensation Harvard will receive for any changes will be decided in bankruptcy court, said David R. Lampe, Little’s director of corporate marketing and communication.

“Issues of the lease are under litigation,” Lampe said.

Meanwhile, Molecular, another tenant, is withholding payment from Harvard. The web developing firm rents 90,000 square feet of the Watertown space.

Molecular’s Chief Financial Officer David A. Kaplan, told the Banker & Tradesman newspaper that the company was not making its payments because of “outstanding issues that need to be resolved” involving Harvard’s actions as landlord, although he refused to elaborate. The newspaper suggested that the dispute involved the physical condition of the Arsenal Complex.

“It’s more of a negotiating strategy,” he told the Banker & Tradesman. “We just felt that sometimes if you make a little bit of noise, you will get some response.”

Kaplan did not return repeated phone calls from The Crimson.

But Kathy A. Spiegelman, Harvard’s associate vice president for planning and real estate, said the Arsenal Complex is in good physical shape.

She said the University is actively seeking to retain its current tenants and find new businesses to fill the empty space—now amounting to about half the complex.

And she said, even with such tenant problems in the near term, the University is not second-guessing its purchase.

“[Harvard] looks at our investments over a very long period of time so we can often make the right decisions for the University over a longer period of time by not pushing to make the most economic decisions in the short term,” Spiegelman wrote in an e-mail.

When Harvard bought the Watertown plot last spring, the goal was to use the property to aid the space needs of the University, according to Spiegelman.

Getting Harvard’s first programs to make the leap to Watertown has been somewhat difficult, Spiegelman said.

“A lot of people go out to the Arsenal and look at the space, but without a plan for how the Arsenal might become a community of University tenants, each group is concerned about being isolated from the campus environment,” Spiegelman said.

Spiegelman said that Harvard’s ultimate plans for the Watertown space will not be decided until the University firms up its plans for the use of its undeveloped space Allston.

—Staff writer Lauren R. Dorgan can be reached at dorgan@fas.harvard.edu.