Navy's Departure May Cost University

The United States Navy's decision to move several thousand personnel out of Crystal City, Va. may be more costly to Harvard than University officials have been willing to admit, according to local government and business leaders.

Harvard Management Company (HMC) President Jack R. Meyer said last month that the Navy's expected departure from the two Crystal City buildings it leases from Harvard would not likely harm the University financially. The Navy currently pays just over $20 million annually for the space.

But according to Jerry W. Norris, chair of the Arlington County Chamber of Commerce, area rents and occupancy rates will be negatively affected by the Navy's decision.

"It'd be tremendously devastating not only to Crystal City but to the entire northern Virginia region," Norris said, citing a potential glut of four million square feet of office space precipitated by the move.

"Real estate in northern Virginia is already in a depressed state. The vacancy rate in adjoining counties is high," said Norris, who is also an executive with the Virginia Power Company. "I would think it would have an adverse effect on lease rates throughout the region."

Norris' views contrast sharply with those expressed by Meyer last month. The HMC president said the move--expected to occur gradually between 1994 and 1999--could ultimately provide a financial reward to the University.

"It's a very close call for us economically," Meyer said in a March 22 interview with The Crimson. "This is not necessarily a big negative for Harvard. We could even come out with a slight net positive, or even a significant positive."

Meyer said HMC would renovate the pair of 23-year-old buildings--which Harvard has partially owned since 1983 and owned in full since 1990--and lease them to new tenants at potentially higher rental rates.

The buildings, which the University currently values at more than $113 million, form a significant segment of HMC's $263 million real estate portfolio.

But Mary Margaret Whipple, vice-chair of the Arlington County Board, called Meyer's assessment of the situation "quite optimistic."

"When vacancy rates increase, the competition among buildings is greater and you're not able to command as high prices as you have before," Whipple said. "It would take a large number of other employers to make up the difference caused by the loss of the Navy."

Whipple said, however, that the presence of several large companies, including MCI and US Air, near Crystal City might attract other commercial tenants to the area. The city's proximity to the Pentagon could also help, she added.

But the local community's most immediate focus is trying to persuade the Navy to stay, Whipple said, adding that Harvard is expected to assist the lobbying effort.

Meyer had said earlier that Harvard has no plans to lobby the government to maintain the Navy's presence in Crystal City, though he said the University opposes the move based on the effect it would have on the community.

"I understand that [Harvard officials] have changed their mind," Whipple said.

And Kathy U. Lash, press secretary to U.S. representative James P. Moran Jr. (D-Va), said Harvard representatives met with Moran to signal their opposition to the Navy move. "I'm assuming they're joining our efforts [to keep the Navy in Crystal City]," Lash said. "There was no signal...that they hadn't."