Death Strip Outpost Lures SoundCloud as Berlin Wall Gets Hip

Berlin’s developers have wooed buyers and tenants by touting the city’s history, from the Weimar era to the Berlin Wall. Now, a building where East German soldiers looked out for defectors to shoot is getting a new life as a technology hub.

SoundCloud Ltd., the music sharing website, will move into a building on Bernauer Strasse that once had its windows bricked up to create the first version of the barrier separating east and west Berlin. It’s one of several properties on the street that investor Simon Schaefer is turning into a technology hotspot known as The Factory for tenants including browser-maker Mozilla Corp. and application developers 6 Wunderkinder GmbH.

“It’s a cool way to build on history,” said 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 emboldened by a thriving economy and rising wealth who are trying to profit from the last war ruins and abandoned lots in Berlin’s central Mitte district. Construction on the complex, erected in 1890 as a brewery and later used as a Nazi bunker, is set to be finished by the end of the year. Some tenants, including the Wunderlist creators, have already moved in.

Revamping District

In another part of Mitte, investors are bidding for the dilapidated Tacheles building, a former department store that was occupied by squatters until last year. A disused post office in the area is due to become luxury apartments.

“In Berlin, there are a lot of unused properties that are not finding much use, but in Mitte there aren’t many left,” said Alexander Kropf, head of Berlin office investment at Jones Lang LaSalle Inc. “The Factory came at the right time.”

At first glance, the building chosen by SoundCloud looks like a typical pre-war industrial conversion, with four stories of yellow brick and oversized windows topped with two floors of modern glass and steel. A look in the yard reveals a pile of rubble from when the Soviets destroyed the Nazi bunker. The street includes Berlin’s Wall Memorial, a 1.4-kilometer open-air exhibition with parts of the barrier and a watchtower.

Two of the windows in SoundCloud’s office were lookout spots used by soldiers guarding a section of the Wall where nine East Germans died trying to flee.

Layers of History

“There are different layers of history in the city and you can feel it every day,” said SoundCloud co-founder Eric Wahlforss. “It’s amazing to be part of building the next layer.”

Bernauer Strasse is unique in Berlin history because it’s the only stretch where so many buildings, 40, formed part of the border, said Maria Nooke, deputy director of the Berlin Wall Foundation. On the night of Aug. 13, 1961, soldiers strung barbed wire through the heart of the middle-class residential neighborhood. Houses that stood in the way were first made part of the Wall and most were later demolished.

The Factory is part of the “second wall” that stood behind the primary barrier facing the West, surviving because of its use to the border police. Between the two walls was the “Death Strip,” where any civilian caught was shot.

“In the months after the border was closed, Bernauer Strasse was a flash point because the building walls marked the border,” said Roger Engelmann, an East Germany historian. “The sidewalk was already West Germany. People tried to escape by jumping out of their windows.”

First Casualty

In 1961 Ida Siekmann died from injuries after jumping out of her Bernauer Strasse apartment window into the West, becoming the first casualty of the Wall. Others escaped their homes safely in the weeks that followed until East German soldiers evicted all residents, barred the doors and bricked up the windows.

Nine of the more than 130 people known to have died while trying to escape east Germany by crossing the Wall did so along the stretch around Bernauer Strasse, according to the Berlin Wall Foundation.

A conversion with such stark contrasts as The Factory is not unusual for Berlin. Germany’s biggest shopping mall will open this spring on a site of a former Jewish department store that was seized by the Nazis. Soho House, the operator of clubs and hotels, opened its only German location in a building once used as the Communist Party’s headquarters.

‘Pre-war Character’

“We’re seeing a lot of conversions, ” said Jones Lang’s Kropf. “Especially startups that can’t afford to build from scratch. They like these old lofty-type buildings with tall ceilings and pre-war character.”

Schaefer, who bought the Factory in 2012 from Asian investors, says he was drawn to the former brewery’s pre-war aesthetics and its layout, with three buildings connected by a yard where workers can play basketball and socialize.

Last summer, Schaefer invited Vint Cerf, Google Inc.’s chief Internet evangelist, and other U.S. Internet experts to a technology conference on the site as construction was still in full swing. Google gave Schaefer 1 million euros in 2012 to organize events in the space, the company said.

“There’s a need to deal with the history, and one of the most positive ways to deal with it is to create something positive and tolerant and forward-looking,” said Schaefer. “Having all the Americans come by and being flabbergasted by the historical backdrop adds to the emotional attachment we have to Berlin.”

Before it's here, it's on the Bloomberg Terminal.