The rationale for Berlin Brandenburg International Airport (BBI) was twofold from the start: primarily, to give the city the airport it deserved – but also to create jobs and to boost the local economy. To the untutored eye, Berlin is scarcely recognisable as the city which was once divided between the Socialist east and capitalist west – that McDonald’s is joining Starbucks to occupy the eastern corners of the former Berlin Wall crossing point Checkpoint Charlie says it all. Nonetheless, it is still coming to terms with its inheritance.
René Gurka, chief executive of Berlin Partner, the public-private body responsible for promoting business opportunities in the city, says that there was a delayed response to the reunification of Germany (and Berlin) in 1990. In the heady rush which followed the dismantling of the Berlin Wall, it was assumed that German big business would flock to the new capital and take up the slack created by the sudden acquisition of the eastern part of the city.
In fact, some 300,000 jobs were rapidly lost as businesses tended to move out; consequently Berlin’s rate of unemployment, at about 14.3%, is significantly higher than the 9% national average. “Our goal as an agency is to create 100,000 jobs in industry – the rest will follow,” says Mr Gurka.
He is confident that this is already under way – particularly in the IT, information and communication technologies, and creative and media industries. “Companies like the energy in Berlin, and many are moving their German headquarters here. Universal is here. MTV is here, having moved from Hamburg. Sony relocated from Cologne. Deutsche Telecom is here. As is Siemens.” In the life sciences sector, he says, Berlin is even beginning to surpass Munich, which possesses a Europe-wide reputation for its innovation economy and a “laptops and leiderhosen” culture which began nurturing biotech in the 1990s. “Munich has larger companies, but we have more – and employ about 350,000 people in the greater Berlin area.”
Harald Wolf, Berlin senator for economics, technology and women’s affairs, told fDi Magazine that orders worth some €1.8bn have already been awarded to contractors, and that BBI is considered “a powerful motor for growth and employment”, not only for the Berlin-Brandenburg region, but for the east as a whole. In the fullness of time, it is hoped that BBI will be responsible for the creation of some 70,000-plus jobs.
“We are competing, with, for example, the UK – and lower costs of land and labour make us very attractive to investors. But some are telling me that we just haven’t been on the shortlist because we don’t have the air connectivity that they need,” says Mr Wolf. The greatest demand, he says, is for new routes to the Gulf, Asia and the US.
Berlin has already witnessed the economically rejuvenating effects of a new transport hub. The opening of the extraordinary Hauptbahnhof central railway station in May 2006 tipped the scales in favour of Berlin for Total when it located its headquarters in the city, and it has spawned a number of other development opportunities. The station is just a few minutes’ walk from Germany’s government buildings; when BBI is open the two will only be 20 minutes apart.
Nonetheless, obtaining financing for the project was in itself a considerable achievement – especially considering its timing. Some €3.5bn is being invested in the BBI project (which was given the go-ahead by European competition authorities in May 2009). The following month the project company agreed terms with the European Investment Bank, alongside a syndicate of seven German banks, for financing worth €2.4bn. But the states of Berlin and Brandenburg have also signalled their financial commitment to the airport, with a 100% loan guarantee in addition to €430m towards the construction of the airport; while Berlin Airports, the project company behind BBI, has self-financed the project to the tune of €430m.
Corridors of industry
These are big numbers – but this is a long-term investment, and Berlin Partner sees future recoupment in large part from the benefits afforded by the ‘airport corridor’ – the development opportunities between BBI in the south-east of the city and the city centre, 20 kilometres away.
Pedro Bamberg is Berlin Partner’s real estate consultant, and explains that the airport corridor possesses more than 9 square kilometres of development space in 34 separate areas, some of the largest of which includes the BBI Business Park, the Adlershof Science Park, Mediaspree, and the Lehrter City Quarter. Adlershof is also one of the most established, and has grown steadily over the past two decades to its present 4.2 square kilometres footprint. Eight hundred companies are based at Adlershof, collectively employing 14,000 people, mostly in high-tech, but also business and media sectors. As in the other development locations, there are multiple opportunities for investors to base themselves on the site, either to build their own bespoke buildings or to move into up-and-running premises.
Old and new
Typically in Berlin, modern buildings rub shoulders with older, renovated premises lending a touch of cosmopolitanism and flair, all too often lacking in comparable developments. The same could be said for Mediaspree in the Kreuzberg-Friedrichshain area, with its turn-of-the-century buildings, charming courtyards and ample green space – hosting some of the world’s most contemporary companies.
Low prices and availability aside, it is the BBI Airport which, undoubtedly, will be the clincher for many of the companies heading to the airport corridor – and many of those will be in the energy sector (Berlin is rapidly developing a reputation for research into renewables and energy efficiency). Siemens has already laid the foundation stone for its Energy Sector Logistics Centre in the Brandenburg town of Ludwigsfelde, 30km from Berlin and from where, from August onwards, some 30,000 spare parts for gas turbines will be manufactured and distributed to customers around the world. Adrian Prietzel, head of standard product marketing at Siemens’ fossil energy service, says the planned airport was thoroughly taken into account when the location for the new Siemens logistics centre was being sought. “We chose Ludwigsfelde because of the good infrastructure, which includes train and truck access, as well as the closeness to BBI.” Berlin Partner expects that many others will soon be applying the same logic.
One developer which certainly hopes so is Petra Nowacki, who is heading up the Gatelands Project, a joint venture between OFB Projektentwicklung and the Kolb+Partner Group. The land was bought in 2006, and “was not cheap, but we bought because of the potential, not because of the pricing”, says Ms Nowacki. The real interest for the project, which possesses a total development area of 130,000 square metres, and a key selling point to investors, is its close proximity (2km) to BBI.
“Because of the airport, we’re in a position to develop something very interesting,” says Ms Nowacki. “We’re going to start with hotels and offices; there will be some light technical space, but the emphasis is not going to be on logistics. Sustainability is very important.” Synergy with local ecological and social needs will be a key feature of Gatelands. “We have tried to anticipate everything – ie, if we have 20,000 employees, what about a kindergarten, affordable housing, etc...” adds Ms Nowacki.
Keystone tenants will be vital.
It is probable that first-comers will include airlines and auxiliary services such as catering – but businesses wanting to be close to government will also show some appetite.
One thing investors attracted to Berlin can be sure of is that they will have the backing of the public sector. Because of the obstacles the city needed to overcome, Berlin is empowered to offer investors subsidies and incentives which are not available in other cities. But Berliners believe that it is opportunity, not subsidy, which is encouraging economic regeneration.
Prospective investors (and journalists) are encouraged to take a helicopter ride to see both the site and the city. It is a fascinating experience. From the air, it is possible to see what can be best described as literal pressure points in German history: the Brandenburg Gate, the Potsdam Bridge, which East and West used for the exchange of captured espionage agents; and, of course, the airports – Tegel, Templehof (designed by Albert Speer, used to keep West Berlin alive during its blockade by the German Democratic Republic), and now the site of BBI – not yet complete, but already assured a chapter in the continuing history of Berlin.