Harvard, the Square's largest landlord, added several more properties to its extensive portfolio in 1986 in what may have been the single most expensive year of commercial real estate acquisitions in the University's history.

Last month, University officials confirmed that Harvard bought two properties, The Architects Collaborative Office Building for $11.5 million and the O'Brien Family Properties for $4.4 million. Those two purchases, added to four other major property acquisitions Harvard previously disclosed, brings the total spent on commercial real estate to $27.4 million in 1986.

The University's buying frenzy last year is attributable, in part, to the recent tax reform which abolished the capital gains deduction as of January 1, 1987. Harvard Real Estate (HRE), Inc., the University's property management firm, was approached by a number of local landlords interested in unloading parcels of land in 1986 before the tax laws changed.

The first of the two purchases, The Architects Collaborative (TAC), is a landmark office building located at 4-12 Story St. According to documents filed with the Middlesex County Registry of Deeds, Harvard agreed to lease the building back to the seller for a 10-year period.

A spokesman for TAC, a nationally-known architectural firm, said thatHarvard's leaseback agreement provides TAC optionsto extend the lease after 1996.

In explaining the sale to Harvard, TACspokesman Kitty Gormley also said that the"sale-leaseback of the building to a responsiblebuyer offered substantial financial advantages toTAC."

"It was an attractive property" because of itscentral location, said Sally H. Zeckhauser,president of HRE. "Those sorts of opportunitiesdon't come to us that often."

In the short term, Zeckhauser said, Harvardwill continue to lease office space in the TACbuilding to commercial tenants. But because theUniversity retains the right of first refusal oneach lease, HRE might eventually rent space thereto academic departments or graduate schools "atthe market rate," Zeckhauser said.

"We are essentially 'landbanking' office spacefor future academic use there," said Jacqueline A.O'Neill, Harvard's associate vice president forstate and community affairs. `Landbanking' refersto the University's pattern of depositing largeparcels of commercial property in its real estateportfolio, land which could someday be used foracademic or Harvard-related residential purposes.

In addition to the TAC building, the Universityalso picked up three small parcels of land, knowncollectively as the O'Brien Properties, which areclose to the heart of the Square. The land andbuildings are located at 88 and 92-96 Mt. AuburnSt. on one side of the block, and 65-67 WinthropSt. on the other side, facing University LutheranChurch.

The multi-million dollar purchase, completedlast December, made HRE landlord to more than sixarea businesses, including the Harvard ProvisionCompany, Brodie's Auto Rental, Skewers Restaurantand University Typewriter.

Kennedy School Grows

Harvard will continued to lease the Mt. Auburnside of the lot to commercial tenants, but theWinthrop St. building located on the back of thesite will be rented to the Kennedy School.

The graduate school of public policy--whichZeckhauser characterized as "growing liketopsy"--already rents space at 57 Church St. andat the 46 Dunster St. building of The SignetSociety. The Kennedy School also plans toconstruct another building on its Charles Riverbank location, capping off the third majoraddition to the school's physical plant in threeyears.

But the sale of the O'Brien Properties toHarvard has generated some apprehension among someof the tenants there. "Everybody's nervous aboutwhat a new landlord can do," said Jonathan B. Hill'73, owner of Brodie's car rental, who said hemust renegotiate his lease in three months.

"So far, Harvard's been a good landlord," Hillsaid last week. "But I have a big question as towhat my future at this location is going to be."

Officials called 1986 a year of unprecedentedbuying by the University. "I can't remember a timewhen Harvard bought so many pieces of property,"Zeckhauser said in a recent interview.

Prior to the record $27.4 million invested in1986, the single largest expenditure Harvard madefor commercial property occurred in 1978 with the$4 million purchase of the so-called Parcel 1B, apreviously undeveloped tract of land along theCharles River now occupied by the University Placeoffice building and the University Greencondominiums.

"Harvard Square real estate is a lot moreexpensive today than it was five years ago,"Zeckhauser said. "[Purchasing] six large parcelswouldn't have been unusual, but the dollar amountwouldn't be as large."

Martha A. Bridegam contributed to thereporting of this story.