Berlin Real Estate Developers Are Hot for the Historic Center

As developers pounce, historic properties are harder to find

Berlin Real Estate Developers Are Hot for the Historic Center
A former brewery on Bernauer Strasse that developers are turning into a technology hub known as the Factory
Photograph by Krisztian Bocsi/Bloomberg

Well-stocked snack bars and tricked-out rec rooms have become standard features of startup offices. But how many techies can say they’ve got the remains of a Nazi bunker in the courtyard? Or that their windows were once lookouts for East German border guards?

Music-sharing startup SoundCloud and Mozilla, maker of the Firefox Internet browser, are among the companies that have signed leases for space in a building that once formed part of the Berlin Wall. The former brewery is one of several properties on Bernauer Strasse that investor Simon Schaefer is turning into a technology hub known as the Factory . “It’s a cool way to build on history,” says Schaefer, who was 12 when the wall fell in 1989. “You see the East German architecture, you see the 19th century neighborhood, and then you have something modern we’ve put on top. That’s the essence of Berlin.”

Schaefer belongs to a second generation of developers seeking to profit from the last remaining war ruins and abandoned lots in Berlin’s central Mitte district. Renovation of the complex, erected in 1890 by the Oswald brewing company, is set to wrap up by the end of the year.

Elsewhere in Mitte, investors are bidding for the dilapidated Tacheles building, a former department store occupied by squatters for more than two decades. A vacant post office is set to become a luxury apartment complex. “In Berlin, there are a lot of properties that are not finding much use, but in Mitte there aren’t many left,” says Alexander Kropf, a broker at Jones Lang LaSalle in Berlin. “The Factory came at the right time.”

The former brewery features four stories of yellow brick and oversize windows topped with two floors of modern glass and steel. In the yard, rubble marks the location of a Nazi bunker destroyed by the Soviets. The Berlin Wall Memorial is just down the street. “There are layers of history in the city, and you feel it every day,” says SoundCloud co-founder Eric Wahlforss.

On the night of Aug. 13, 1961, soldiers strung barbed wire through the heart of the middle-class neighborhood as they partitioned the city. In the weeks that followed, many people escaped to the West by jumping from windows of homes along the street, until East German soldiers evicted all residents, barred the doors, and bricked up the windows. The Factory is part of the “second wall” that stood behind the primary barrier facing the West. The area between the two was dubbed the “death strip,” because civilians who ventured there were liable to be shot.

This type of real estate rehabilitation isn’t unusual in Berlin. Germany’s biggest shopping mall will open this spring on the site of Wertheim, a department store owned by a Jewish family and taken over by the Nazis. The Berlin outpost of Soho House, the operator of clubs and hotels, was once the East German Communist Party’s headquarters. “There’s a need to deal with the history,” Schaefer says. “And one of the most positive ways to deal with it is to create something positive and tolerant and forward-looking.”

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