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BUSH-LEAGUE TO IVY LEAGUE

Yale uses retail to invigorate once-blighted New Haven downtown

BY DEBRA HAZEL

Yale bought up buildings on major thoroughfares near the campus and leased them to national and local tenants.

Yale University, one of the world’s pre-eminent institutions of higher learning, can claim that it supplied America with its three most recent presidents. But, until recently, its immediate surroundings, including its retail offerings, were anything but Ivy League.

Downtown New Haven, Conn., suffered from many of the same woes as other East Coast cities, including the flight of residents to the suburbs, industrial decline and crime.

But after a decade of help from Yale’s University Properties real estate division, the city’s once-downtrodden downtown retail now draws much more than just students. By buying stores on major thoroughfares Chapel Street and Broadway and leasing them to both national and local merchants, Yale has remade New Haven as a destination for shoppers from neighboring communities as well.

“The change has been drastic,” said Gideon Ghebreysus, the co-owner of Caffé Adulis, an Eritrean restaurant located one block from Chapel Street. He and his brother and partner, Ficre, plan to open a second restaurant, Bistro La Mensa, on Broadway this month. “It’s in a great process. It’s been a product of a lot of people working hard on it.”

That work began in 1993, when Yale President Richard C. Levin saw that New Haven’s streets were considered boring at best, dangerous at worst and hardly conducive to recruiting students. The university began a dialogue with the city and started investing in buildings around its centrally located campus. Yale also got the state and city to make improvements in the infrastructure — removing power lines from the streets, fixing sidewalks and installing faux gas lamps to create an “old town” ambience.

In 1995 Levin recruited alumnus Bruce Alexander, who had retired from his post as director of commercial real estate at the Columbia, Md.-based Rouse Co., to help with the work.

“He asked me to help him do some things from time to time, about five days a month,” Alexander said. But Alexander ended up spending so much time with the university that he relocated from Maryland to New Haven, becoming a vice president and the director of city and state affairs for Yale.

The idea was simply to merchandise New Haven’s streets along the same lines as a regional mall, while taking advantage of the excitement of the city.

“Living in a city is just a lot more fun,” Alexander said, pointing out that New Haven has more than 40 ethnic restaurants in the downtown alone. “[In addition,] crime was going down all over the United States, and particularly in New Haven,” largely because of a community policing program, he said.

And the city’s demographics are strong. In addition to the 41,000 Yale students, the population within a 10-mile radius of the downtown exceeds 430,000, according to the university. The New Haven metro area’s 1999 per capita income totaled $45,267, higher than the state as a whole, according to the state Bureau of Economic Analysis.

Yet the area was under-retailed, Alexander says. Nearby Chapel Square Mall had struggled for years (see story, Fresh start), and plans to build the Galleria at Long Wharf regional mall near the waterfront never came to fruition.

In 1997 Yale retained real estate consultant and broker John E. Pollard, SCSM, president of Middlebury, Conn.-based Real Estate Advisors, to lease 150,000 square feet of retail space along Broadway and 125,000 square feet on Chapel Street. Also a Rouse alumnus, Pollard was familiar with the city on both a professional and personal level: He had leased Chapel Square Mall for Rouse in the 1980s, and his father-in-law is Carm Cozza, the former Yale football coach and member of the College Football Hall of Fame who holds the most wins in Ivy League history.

The first phase of the redevelopment process, from 1996 to 2002, called for adding destination retailers to anchor Broadway. But persuading national chains to take a chance on a downtown area with the reputation for crime that New Haven had was not easy, Pollard says.

In a survey of students, respondents said they desired a health and beauty chain, and a J. Crew. In 1998 health and beauty products retailer Origins (a brand of the New York City-based Estée Lauder Cos.) became the pioneer, opening a store at Broadway and York Street in what had been vacant space.

“I finally got [Estée Lauder COO] William Lauder to look at New Haven, and he decided to take the gamble,” Pollard said. “The sales so far have far exceeded our threshold, so we have ended up with a better rent deal.”

Getting J. Crew to come was no evening stroll either.

“I had to sell hard to get them to look at a nontraditional location,” Pollard said. “I said, ‘Look at your catalog sales to Yale.’ ” The store opened in January 2002.

Barnes & Noble took over the Yale Co-Op in 1997, and today it offers its traditional book and café items as well as merchandise and textbooks with the Yale logo. Nearby, old alleys were eliminated and a 30,000-square-foot building constructed to house Urban Outfitters, which opened in mid-2001.

The second phase, now under way, calls for introducing independent merchants to give Broadway an identity as a boutique-oriented Main Street. That, too, was a challenge. Pollard said he negotiated for two years with some existing tenants to get them to relocate. One retailer that got moved was Cutler’s, a second-generation family-owned music store that has achieved legendary status among Yalies and other locals. But its new space, just down Broadway from its old location, afforded the retailer more space.

“Their sales have continued to rock right along,” Pollard said, pun intended.

Equally important was to add more food offerings, particularly a produce market. Alexander says he became a fan of the small markets found in major cities, with flowers, fruit and vegetables displayed on outdoor stands. So now there is Healthy Gourmet, open 24 hours a day, offering a salad and food bar and a small amount of seating upstairs. And two former Yale students and a restaurant entrepreneur opened MexiCali Grille.

Meanwhile, Thom Brown Shoes, a Boston mainstay, opened on Broadway last winter.

“We want more fashion, though it’s tough finding independents looking to expand,” Pollard said.

Chapel Street, too, has seen entrepreneurial retail, including jewelry stores, galleries and cafés. These offerings now allow New Haven residents to shop close to home and give visitors a reason to browse.

“Now you don’t have to travel to New York or to Stamford,” said Denyse Miller, manager of the Alexia Crawford designer jewelry store that opened on Broadway late last year. Miller, who is a New Haven native, has worked at various retailers in the city over more than a decade. “New Haven has improved 150 percent.”

Over the past 10 years, Yale has invested more than $100 million from its endowment fund to help remake its hometown. And the fund is doing well while doing good: Sales run about $450 per square foot. Rents for street-level stores range from the high $20s per square foot to $80 per square foot. Second- and lower-level tenants pay about $18 to $20 per square foot.

With 72 retail tenants, Yale is now the largest property-tax payer in New Haven. Only one merchant, a restaurateur testing a crepe concept, has failed.

“We didn’t bat 1.000, but we’re batting .980,” Pollard said. “Because of our patience, we’ve had a success rate better than most.”

The key to success is that Yale runs the shops much like a regional mall. Retailers pay base and percentage rent, and stores (except food service) have uniform operating hours, allowing the downtown to be marketed and merchandised as one entity.

“We’ve taken all the good aspects of a mall, and taken it to urban development,” Alexander said.

Only one vacancy remains on Broadway, and Pollard is now focusing on 6,500-square-foot and 4,800-square-foot spaces on Chapel Street, not far from the Chapel Square Mall, which itself is under redevelopment.

“In an urban environment, the work doesn’t end,” said Pollard. “We will continually look at older spaces to re-lease them.”

Yale is not the only landlord looking to improve the city, he says, and there are several stretches of both Chapel Street and Broadway that the university does not own. New Haven overall is in the midst of a $1.5 billion project to develop the downtown, including construction of a new marina, rehabilitation of older buildings into housing units, expansion of various railway stations and improvements to the airport.

“We don’t own all the property in town,” Pollard said. “That’s not the goal. We want to improve New Haven for all landlords.”

Through everyone’s efforts, New Haven is once again becoming the hub of Connecticut. Its streets are now vibrant with activity — including the students, city residents and even the visitors from Greenwich, New Canaan, Westport and other affluent neighboring towns.

“People want to be here,” said Lynn Fredricksen, communications director of the New Haven Chamber of Commerce.

But for many retailers, the university is the key.

“Yale is the incubator,” said restaurateur Ghebreysus. “They bring a lot of people from all over the world. With great people at the helm, this is a great situation.”

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