The Arbor is the space between 123 Sesame Street and Hooper's Store which houses a structure that started as a community garage. The area — which has also been referred to as a courtyard, the play yard, or simply the yard — has gone through many changes over the years.
During the first season, when the street was straight, this area was confined simply by a tall fence with a palm tree painted on it. The space was occupied by some lawn chairs where stories would sometimes be read.
When the show went into its second season, the street was curved, expanding the area. At first, the arbor included a tall fence next to Hooper's Store separating the area from a simple backdrop of apartment buildings in the distance, and a tower with the alphabet painted on it.
In the late 1980s, the background was gradually updated. By 1989, more distant buildings were added, and the alphabet tower was converted to a set structure that stood behind the garage (and was later repainted gray when the set was cleaned up and brightened in 1993).
The fence was shortened in 1998, and the backdrop was replaced with a small two-story apartment building. The alphabet tower made way for another apartment building, and a small community garden was added in between the garage and 123.
The main structural feature of the arbor area is a small building in the center, initially used as a garage. The building featured a large green staircase to a second floor attic (seen in Elmo's Magic Cookbook), as well as a basketball hoop.
Episode 0138 focuses on a dispute between Gordon and Mr. Hooper over who owns the building. It is then revealed that the garage falls on both of their property lines. When not being used to house Susan's Volkswagen, the building was used as a multi-purpose storage space for the neighborhood.
Sometime prior to 1989, the garage fell under Oscar the Grouch's ownership and was used to house his Sloppy Jalopy. In Episode 2537, Hiroshi began renting out the space from Oscar to use as his art studio until his departure in 1990.
In season 32, the building became home to Gina's new veterinarian practice. For season 33, the building was slightly redressed, with a new paint job for the stairs and double doors. These were reverted back by season 37, while the double doors were replaced by a single door.
When production moved to a different studio within Kaufman Astoria Studios, the garage building was refitted and redressed. It no longer featured a staircase and a "Charlie's Auto Repair" sign was added, though this business was never seen in practice on the show.
During the set changes of season 46, the garage building was converted into a community center with games, toys and costumes. The rooftop was also revamped into a private sitting area.