The Market Theater off John F. Kennedy St. will close for two years as it builds a new performance space on Arrow Street. The theater is know for its experimental performances and contemporary plays.

Ending speculation that Cambridge’s newest theatrical troupe would close after its first season, the millionaire founder of the Market Theater announced last week that he has purchased an empty parking lot on Arrow Street and plans to build a 350-seat performance space on the site.

The Market will take a two-year hiatus while the new theater is being constructed. But, according to owner Greg Carr, the downtime may mean additional opportunities for Harvard students as he looks for theater projects to sponsor while he lacks a venue of his own.

The Market is the only major professional theater company in Cambridge besides the American Repertory Theatre (ART). Its temporary closure will mean the loss of professional jobs, including the company’s director and most of its eight full-time employees.

The Market Theater mounted its first production last spring but then, in January, the theater’s owner announced that—effective this summer—he would lease the theater’s performing space to the UpStairs on the Square restaurant, which plans to convert the floors into a replacement for UpStairs at the Pudding.

That set off weeks of speculation as to the future of the Market, which quickly had become known for its experimental performances of plays by new and younger playwrights.

The Market’s owner, Greg Carr, who made his fortune investing in high-tech companies in the late ’80s and early ’90s, said he is dedicated to keeping the company in Harvard Square. He had originally hoped to rent a temporary space while building the new theater, but when he found nothing available in the area, he decided to close the company for two years rather than move outside the Square.

“I didn’t want to do something in another city because I think that the identity of the Market Theater is Harvard Square,” Carr said. “We decided that it’s not a bad time to take a break.”

The purchase of the Arrow Street lot last Thursday paves the way for what Carr calls a new “arts and non-profit complex.” It will cost an estimated $18 million and more than triple the Market’s seating capacity.

He said the company might be ready to produce as early as spring of 2004, assuming the city approves Carr’s plan to build a tall building with substantial space above the stage for technical purposes.

In the meantime, Carr—whose company put Harvard students on the Market stage this winter in a production co-sponsored by the Office for the Arts (OFA)—said he is seeking more opportunities to collaborate with undergraduates.

“Harvard students who are interested in drama may actually gain in the coming year and a half,” he said. “Without a place to do professional theater, that puts me more in a place to think what alternatives I have.”

Those alternatives, he said, include “sponsoring some student theater” and bringing professionals to work with undergraduates. Carr said he is holding preliminary talks with OFA about ways he could work with Harvard students.

Tom Lee, the director of the OFA program that sponsored this winter’s project with the Market, said OFA is continuing discussions with Carr.

Lee said undergraduates currently have opportunities for professional mentorship only through the ART, and he called the temporary closing of the Market a “big loss” for students.

“It was a really great opportunity and one we had really hoped would continue,” he said. “There’s kind of slim pickings.”