Walking around New Haven near the Yale campus, one notices more than a few vacant storefronts. At any one time, some turnover must be expected, but the presence of longer-term vacancies, especially in the Broadway area, is notable. One might think a troubled business climate is responsible for the vacancies, but business is strong for occupied storefronts, judging by the foot traffic.
A cursory glace at the empty shop windows around Broadway shows that University Properties owns nearly all the real estate. This is true not only in the Broadway area; University Properties owns many storefronts in the Chapel-College area and in the Audubon Arts District. University Properties’ concentrated ownership and tenant selectivity offer better explanations for the vacancies. The extent of the group’s holdings has been good for the University and the surrounding area in many ways, but it is problematic for its effect on prices and on the store variety.
With its near-monopoly, University Properties transformed the Broadway district in the last decade. It has ensured a certain standard of quality and character for the district and has made the area cleaner and safer by, for example, requiring the stores to remain open until 9 p.m. But the extent of the holdings in the area ensures that University Properties has significant market power regarding leases, allowing it to command higher rents or set other rules for tenants, such as the requirement that they remain open so late each evening.
But I think it is safe to say the goal of University Properties has never been solely profit maximization. That is, University Properties has served as the University’s tool to shape the development of its surroundings to make New Haven a more attractive community in which to live and work.
Nevertheless, the number of vacancies in the area suggests that University Properties’ market power has raised the cost of doing business in the district. Higher costs means the businesses in the Broadway area must charge higher prices. This hurts Yale students, who are among the area’s principal customers.
Potential tenants are limited not just by higher costs but also by the selectivity of University Properties in granting leases. While achieving a good mix of stores is essential to the health of all the businesses in the area, Yale’s brand of selectivity is problematic. As it stands, the selection is skewed toward the upscale. Although not as boutique-focused as Chapel Street, Broadway still has pricey retailers like Wish List. Even its national chains, such as Urban Outfitters, J.Crew and Origins, are more up-market.
New Haven and Yale include consumers of all different economic levels, and more retailers on the cheaper side would serve a larger market and increase traffic to the area. A store like the GAP, even if it doesn’t have the most popular fashion appeal, could be a great addition, with its basic clothes and lower prices. Perhaps a more popular alternative would be a store like American Apparel, which manages the same basic approach with a bit more popularity. Columbia and Harvard already have American Apparel stores within blocks of their campuses. These are just examples; University Properties need not solicit these chains specifically, but it should find retailers that broaden the range of options on Broadway.
While high-priced boutiques and trendier, more-expensive chains might give the area more cachet and a sense of prestige, there isn’t an economic interest in excluding cheaper stores; lower prices don’t necessarily mean lower profits. Just ask Wal-Mart.
The days when everyone at Yale graduated from prep schools and wore J.Press all the time are over. University Properties would do well to represent the diversity of Yale and New Haven in its retail tenants. Likewise, University Properties only squeezes the consumers — many of whom are students — when it squeezes its tenants. Keeping the storefronts filled and diversifying retailers will strengthen the business district, give students more choice and, in the end, help University Properties’ bottom line — after all, vacant stores don’t pay rent.
Patrick Ward is a junior in Branford College. His column appears on alternate Tuesdays.