The U.S. Navy will likely vacate two Virginia office buildings it leases from Harvard Management Company (HMC) for about $20 million a year, HMC President Jack R. Meyer confirmed yesterday.
More than 4,500 Navy employees currently working in the two 12-story buildings--located in Crystal City, Virginia, near the Pentagon--will be moved out as part of the Clinton administration's plan to downsize the defense budget.
A Navy spokesperson last night said she could not comment without more knowledge of the plans, which were first reported in yesterday's Boston Globe.
But Meyer said the Navy is not expected to vacate the buildings anytime soon.
"It'll probably be a number of years," he said, adding that the move has not yet been officially confirmed. The Navy's leases on the buildings expire in 1996, but the Navy may take six years to move its offices entirely, according to the Globe story.
Meyer yesterday denied reports that the Navy's decision had caught HMC officials off guard. He said the management company and the external auditors it hires to appraise the properties have been aware of the possibility for some time.
"We were certainly not stunned at the Navy's announcement. In fact, we were not even particularly surprised," he said.
"We have explicitly considered the possibility of the Navy leaving for three years and we have explicit contingency plans should the Navy decide to leave for any reason," he said.
Meyer said the "contingency plans" include refurbishing the buildings for general commercial use. Higher rents paid by typical commercial tenants may even make the transaction a profitable one for the management company, he said.
"It's a very close call for us economically," Meyer said. "This is not necessarily a big negative for Harvard. We could even come out with a slight net positive, or even a significant positive."
"I don't think we're looking at any writedown resulting from this," he added. Harvard invested $66 million in 1983 for a stake in the buildings, and completed its purchase in 1990, according to the Globe report.
Still, Meyer said HMC opposes the move, although it may not harm the University economically.
"For the sake of the [Crystal City] community, obviously we would prefer that the Navy stay," he said. "This is a tough blow for that community and it's unfortunate