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01/26/2005 — The power station that sent steam heat to all 11 buildings of the Watertown Arsenal for nearly two centuries is a pipsqueak among giants in the former Army complex. But the little brick building is impossible to miss.
With floor-to-ceiling windows on three sides, the compact station practically glitters. It also comes with its own exclamation point -- a 150-foot smokestack that has served as a Watertown landmark. Inside, a soaring two-story ceiling built to accommodate the big boilers makes the 11,000 square feet seem large.
The powerhouse was gutted in 2000 as part of the conversion of the historic arsenal to office park, but for all of its charming swagger it failed to attract a tenant. That can be explained in large part by the dot-com bomb that turned the Arsenal on the Charles -- along with many of the region's offices -- from nearly full to half-vacant. But there were aesthetic considerations, too.
"We wanted someone who wasn't going to close it up and make a dark thing of this wonderful light box," said Edward Reiss, director of university and commercial real estate for Harvard University, the Arsenal's owner.
Last year, amid a flurry of leasing that will bring the Arsenal once again to 94 percent full, the powerhouse found a match. In December, after a $2 million buildout that brokers say includes a generous investment from Harvard, A123Systems moved in with 35 employees.
A123, formed in 2001, aims to power the world by making a low-cost, lighter, safer, more powerful rechargeable battery. Chief executive David Vieau said the science behind the new battery is out of Massachusetts Institute of Technology, and the target market is everything from PDAs and power tools to electric cars.
The 21st-century power pioneer did not go looking for a 19th-century powerhouse as its first home. "That was coincidental," said Vieau. But the young company definitely wanted a stand-alone building that would give it an identity. Or at least reflect its potential power.
A123 has yet to generate revenue, but it exits a three-year incubation period at the Boston University Photonics Center with $32 million in venture capital from investors that include Michael Moritz of Sequoia Capital, the seed fund for Apple Computer Inc., Oracle Corp., and Cisco Systems Inc., among others. "We have some major corporations as our clients, and we wanted a building that would help them understand us," Vieau said, adding that A123 starts production this year.
The company also needed to be mindful of its employees, said broker Roy Hirshland, whose T3 Advisors led the search for the A123 headquarters.
"For early-stage companies who are asking potential employees to make a bet on them, real estate is a recruiting tool," he said.
And for a science-driven start-up, the goodies include proximity to universities, nearby amenities, and the kind of funky, relaxed workplace typically favored by people who often work around the clock. The Arsenal office park provided the conveniences of a large research campus and a shuttle to Harvard Square every 20 minutes.
Its image well-served by the real estate, the company then set to work with Eric Silverman of the design/build construction company MCMUSA Inc., lab layout specialist John Rafuse, and architects Alberto Salvatore and Visda Saeyan to find space inside the powerhouse for its many uses: offices, labs, a mini-manufacturing area, and tons of specialized equipment, including a large, prefabricated dry room that keeps the temperature at the 1 percent humidity required to make batteries. The company added 4,000 square feet of office space with a second-story loft that left the ceiling and beams exposed.
"The challenge was to get all this in and still retain some of the amazing character the building had the day we walked in," said Salvatore. "I think it will hold them for a little while, until they start selling batteries like crazy."
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