Berlin building boom continues according to The Wall Street Journal

A Building Downturn? Not in Berlin

Developers Move Ahead With Projects in Areas Opened by Wall's Fall

By WILLIAM BOSTON for the Wall Street Journal

June 11, 2008

BERLIN -- Even as the economic outlook darkens in Europe, developers here are trying to further plans for the latest stage in the massive series of developments to rebuild Germany's capital after the fall of the Berlin Wall.

Developers still get giddy when they recall those heady days after Germany unified and Potsdamer Platz, for decades buried under a minefield in the no-man's land that divided East and West, was transformed into a bustling commercial center. But that megaproject seems small compared with the ambitious development the city is hoping to kick off now. By the beginning of 2009, the first building cranes are expected to go up as development of the wasteland around Berlin's new central train station gets under way in earnest.

"This is about the creation of a new city district with the development of huge plots that will be much larger than Potsdamer Platz," says Holger Lippmann, managing director of the Liegenschaftsfonds Berlin, the state-government agency charged with selling property owned by the city.



The development includes three distinct multiuse projects with some 9.8 million square feet of new stores, office buildings and apartments. First in line is Humboldthafen and the area around Humboldt Harbor called the Spreebogen on the Spree River, which flows past the new train station and near the Chancellery and the Reichstag. Next will be two areas north of the train station, the Lehrter Stadtquartier and the Heidestrasse development.

The development is moving forward even as other large projects around the world are stalled by the credit crisis. This is especially true in the U.S., where a lack of financing has forced developers to slow or stop major projects in New York, Dallas, Phoenix and Seattle.

In Europe, some high-profile projects are still making headway. In Paris, a 9.1 million-square-foot development at the site of the former Renault factories in Boulogne-Billancourt is fully financed and about one-third complete, says Michael Topham, chief executive of Hines Europe, the developer. Hines also is taking the lead on another major project, the Porta Nuova, or new gate, in Milan. Planned are 3.9 million square feet of offices, apartments, retail space and a park -- all crisscrossed by bicycle paths -- on fallow industrial land near the Garibaldi train station.
In London, meanwhile, the "Shard of Glass" tower, planned to be completed by the end of 2011, is moving ahead after a change of investors. A British developer, Sellar Property Group, is still overseeing construction, but in January Qatari investment bank QInvest, Qatar National Bank, Qatari Islamic Bank and Barwa bought out CLS Holdings and the Halabi family trust. The Qatari investors have pledged to back the lion's share of the estimated £2 billion ($4 billion) in building costs.

Berlin officials are optimistic about the Humboldt Harbor project because the first plot for development was sold in April to a group of Spanish investors. Details of the deal and the identity of the buyer are being withheld until the deal gets approval from the city of Berlin, which is expected by July.


Berlin completed the new Potsdamer Platz, featuring the SONY Center with its futuristic glass dome, the first of several planned city-wide development projects.

The site is to include restaurants and a hotel, which may prove to be a tricky endeavor, because Berlin has seen a number of hotels built in recent years and its room rates are less than those in such major cities as London and Paris. But Mr. Lippmann says that after the Berlin Wall fell, undeveloped inner-city spaces became available that simply don't exist in cities such as Paris, London, Rome and New York. "In commercial and office property, you usually don't start building until you've rented 70% of the space," Mr. Lippmann says. "But it's different here. The location is so exceptional, you know you'll find tenants in the hotels and offices."

Germany's major commercial-property markets continue to be robust, showing falling vacancy rates and rising rents for top-class office space, according to CB Richard Ellis, a real-estate-services group. While London prime rents fell more than 7% in this year's first quarter, there was no change in Germany's major markets, the firm says.

Before World War II, Humboldthafen was Berlin's oldest and largest inner-city harbor, where ships would dock and unload raw materials. The area was flattened by Allied bombing during the war and then left as a wasteland for decades after Berlin was divided. After German unification in 1990, the area near the Reichstag to the south of the Spreebogen became the new government district. In 2006, a new central station opened on the north shore at the site of the destroyed Lehrter Station, and plans were made to develop the harbor and the empty land north of the station.

Mr. Lippmann says a Europe-wide tender for bids for a second plot will begin in late June. He expects to conclude sales of the remaining Humboldthafen properties by early next year.
Development of the Lehrter Stadtquartier and the Heidestrasse isn't expected to get under way in earnest until 2010 or 2011, says Wilhelm Brandt, a spokesman for Vivico Real Estate. The major construction will include a hotel and convention center and an office tower. Mr. Brandt says Vivico is negotiating with developers for the hotel and convention center. "We expect to conclude those talks within the next few months," he said.

source: http://online.wsj.com/article/SB121314363747162745.html