The German city of Frankfurt (Oder) boasts a strategic location that connects it to much of Europe, especially Poland, with whom it literally shares a border. Its ever improving infrastructure, growing industry cluster and ‘twin city’ status with Polish neighbour Słubice is increasingly attracting the attention of foreign investors.

Frankfurt (Oder) is not to be confused with Frankfurt am Main, Germany’s large financial hub located 500 kilometres to the south-west. Though they share a name, Frankfurt (Oder) offers a charming, small community atmosphere and interesting border location, alongside its strong employment specialisms.

Location, location, location

A main city in Germany’s federal state of Brandenburg, Frankfurt (Oder) is situated on the Oder river that separates Poland and Germany, right next to the Polish city Słubice on the other side. The cities are an hour’s train ride from Berlin – Germany’s capital and largest city, home to 3.2 million people – while Berlin Schoenefeld Airport is a 45-minute drive away and is adjacent to the Berlin Brandenburg Airport, set to open in 2020.

Subsequently, both cities benefit from Berlin’s labour force, from which more than 1000 workers commute into Frankfurt (Oder) every day, while 7000 people head in the opposite direction to Berlin. As an east Brandenburg industrial hub, roughly 13,000 people commute into Frankfurt (Oder) from its surrounding area during the working week – a substantial figure considering that its population is only 58,000. Increased commuting in recent years means unemployment in Frankfurt (Oder) has decreased from 10.2% in 2016 to 8.7% today. 

Notably, the city is located on a pivotal part of the Trans-European Transport Networks, and more specifically the east-west transport route of the North Sea-Baltic Corridor. Easy access to two major national markets, as well as the emerging markets of eastern Europe, has led to Frankfurt (Oder) branding itself a ‘gateway to the East’.

Building bridges – not walls

The meaningful relationship between Frankfurt (Oder) and Słubice is not that of nominal ‘sister cities’ spread across continents, but rather one of shared land, community and economy.

The ‘Twin City’, as locals call them, is a shining example of European integration and German-Polish unity. The Frankfurt (Oder)-Słubice Co-operation Centre calls the crossborder city a trailblazer of the European ideal that is embodied by the motto: ‘Two countries, two cities, one region’.

In 2016, the Twin City won an award for ‘Neighbourhood innovation – community as a model for success’ from the national innovation contest run by the federal government and Federation of German Industry. Co-operation between the two cities permeates all sectors, from education and infrastructure to mutual city marketing, and ‘Frankfurt (Oder)/Słubice – without borders’ has been the joint umbrella brand of the city’s external image since 2012. 

That same year, the crossborder bus system began and in 2015 both cities’ heating networks were connected. Trains to Berlin depart Frankfurt (Oder) every 30 minutes and Słubice is a mere 15-minute drive from Frankfurt (Oder)’s city centre. Every day more than 1000 people use the crossborder bus that links the two cities’ town centres and universities. 

Part of Frankfurt (Oder)’s university, the European University of Viadrina is located in Słubice. Founded in 1506, its campus is home to 6500 students from more than 90 countries, and it is ranked among Germany’s top universities for business administration and law. 

Central to the life of Frankfurt (Oder)’s scientific community, meanwhile, is the Leibniz Institute for Innovations for High Performance Microelectronics, known as IHP, a leader in high-frequency electronics. With more than 300 employees from 23 countries, it is a research and design centre for systems design, circuit design, technology and materials.

Investment logic

From a foreign investor’s perspective, the twin city initiative means a broader and more affordable workforce equipped with multiple languages and high-levels of education. Frankfurt (Oder) was recognised in fDi Magazine’s 2016/17 German Cities of the Future ranking for cost effectiveness, largely due to its significantly lower worker and rental costs than Berlin, as well as the highest subsidy levels in Germany – up to 40% grants for investments.

Since 2003, the city has had 49 greenfield foreign investment projects from 17 countries, with US companies playing the most significant role, according to greenfield investment monitor fDi Markets. Asian countries are also showing an increasing interest in the location. After 10 years of successful production in Frankfurt (Oder), the Japan-based electronic producer Yamaichi recently announced its decision to invest in the city again.  

About 200 Polish companies operate in Frankfurt (Oder), the largest being cargo terminal operator PCC Intermodal, which has engaged in a public-private investment into the terminal in the city’s Freight Village. With a new gantry crane and additional handling tracks, the terminal helps transport 130,000 containers of cargo yearly from the region to Europe’s main ports.

Meanwhile, e-commerce companies have already discovered the advantages of Frankfurt (Oder). Chinese plastics manufacturer YT Global Precision Leader opened its first foreign branch to supply its European customers faster, in December 2016. Another Chinese company is currently building its service and return centre in Frankfurt (Oder) for clients from the growing area of online trade.

A regional context

Albrecht Gerber, former minister of economic and energy affairs of the state of Brandenburg, says: “[The city] combines scientific expertise with the strengths of a traditional yet modern industrial site. [Its educational facilities] contribute to the region’s attractiveness for national and international professionals, [as do] global companies such as Astronergy, [not to mention] the city’s geographic position, high quality of living, working and recreational activities.”

Berlin’s booming economy has absorbed most of the real estate and the labour market of the capital and its surrounding suburbs. “There is almost nothing left,” says Christopher Nüßlein, managing director of Investor Center Ostbrandenburg, a business development agency. The regional agencies are therefore hoping to take advantage of the situation. “We have prepared everything companies need for a fast and successful settlement. Frankfurt (Oder) stands out thanks to large [areas that] are ready for construction. Attractive workplaces on-site are the best driving force for a positive development of the whole region,” says Mr Nüßlein.

Since 2004, the state of Brandenburg has identified Frankfurt (Oder)’s “strengths to be further strengthened” as automotive, food and drink, logistics, metal production, media, and power engineering.

Cross-industry updates

Frankfurt (Oder)’s claim to being a logistics destination at the centre of Europe is enhanced by its intermodal terminal for combined transport. More than 36 block trains to and from Hamburg, Bremerhaven, Rotterdam, Duisburg or Antwerp are dispatched every week. After being upgraded with a crane runway, the transfer between 2016 and 2017 has doubled to about 130,000 standard containers (TEU).

In addition, about 70,000 square metres of additional warehouse space is currently being developed adjacent to the terminal area and will be marketed to logistics services companies. “[For this reason] we see great potential for the business model of returns management and reverse logistics,” says Mr Nüßlein.

Frankfurt (Oder) has developed its industrial park along the traffic axis and the GVZ Frankfurt (Oder) cargo centre is integrated into international road and railway traffic via target locations on the highway and the terminal for combined transportation.

The city has recently established a new industrial park for large settlements with a total surface of 440,000 square metres in close proximity to the highway A12. The price of €20 euros per square metre of a developed commercial property, common in the region, is low compared with the rest of the country.

Online on target

In 2018, Deutsche Telekom completed its programme to extend high-speed internet access in the central urban area, and about 16,000 households and companies now benefit from new, high-performance VDSL connections at up to 100 megabits per second.

These improvements are significant for Frankfurt (Oder)’s publicly owned TeGeCe technology park, home to more than 50 national and international companies and some 3000 employees. TeGeCe enables SMEs to start local production by leasing facilities at an affordable cost and provides the necessary industrial infrastructure, such as water supply, waste disposal, gas lines and more.

The companies in TeGeCe cover numerous sectors, including electrical component manufacturing, plastic parts for automotive, service centres and BPOs, companies in civil engineering, health services, building services, online trade start-ups and e-commerce companies, as well as warehouses and logistics service providers.
In addition to that, the European University and Berlin-based start-up accelerator St Oberholz are currently developing new places in the city centre for the next generation of start-up companies in the region. 

Furthermore, Frankfurt (Oder)’s train connection with Berlin, Brandenburg an der Havel and elsewhere will improve by 2022 due to updates to the Regional Express 1 that include a ‘sprinter’ train with limited stops.

This report was published in association with Investor Center Ostbrandenburg, GVZ Frankfurt (Oder) and Oder Frankfurt Subice. Reporting and editing were carried out independently by fDi Magazine.