Global Economics

Berlin's Cold War Switcheroo


Sharon Stone draped her legs over a table at a news conference last March to show off a brand new pair of green Gucci high heels that she'd bought that afternoon at Quartier 206, a tony fashion boutique on Berlin's Friedrichstrasse. Stone was in town to talk up her new movie, Basic Instinct II,and was answering reporters' questions about how she had spent the afternoon. "Oh, you know, a girl and her shoes," she said, laughing. "I hit three historical sites and a shoe store."

Before the Berlin Wall fell, Friedrichstrasse was better known for the barbed wire and tanks at the Checkpoint Charlie border crossing than for haute couture. But where the forbidding wall once stood, a new, vibrant, and hip East Berlin has emerged that is posing a new threat to the western half of the city. The West still has more economic muscle, but it is the East that captures the imaginations of visitors and investors.

Welcome to Berlin's new cold war, which increasingly it looks as if the former East is winning. The battle now is between what Berliners call City West and City East, and it's a battle for the cultural and economic upper hand.

CULTURAL ICONS. The City East is the old historic center of Berlin, bisected for decades by the Berlin Wall, and over the past 17 years reinvigorated and transformed into a thriving city district with new office buildings and some of Europe's most modern architecture. New occupants of the area include the German government, the world's top media, and an army of corporate lobbyists that followed the political power.

At the center of City East is Unter den Linden, the legendary main street of historic Berlin, plus Friedrichstrasse and cultural icons such as the Brandenburg Gate, the Staatsoper, the Pergamon Museum, and Humboldt University.

Before German unification, West Berlin was an island surrounded by East Germany and was a constant thorn in the side of East German leaders. Easterners longed to visit the boutiques, cafes, nightclubs, and cinemas on the broad Kurfürstendamm boulevard, which is now the heart of City West. But today, landmark West Berlin hotspots such as the Kranzler Café have closed, and many theaters in the West are struggling to survive.

ROOM TO GROW. Though Kudamm still attracts more shoppers than the boutiques on Friedrichstrasse and the East's Hackescher Markt district, the center of cultural and political life has shifted east to the old city center, known as the Mitte. "The heart of Berlin is beating in Mitte again," says Andreas Meermann, 37, manager of Meermann Group, one of the biggest developers reshaping Berlin's city center.

That's translating into big money, too. "There are no major development projects in the West because it's already developed," says Meermann. "Mitte is growing rapidly and this is where you'll find the highest rents."

Some of the most expensive offices are in the new skyscrapers on Potsdamer Platz, a postwar no man's land that lay mostly on the western side of the wall. But rents further east and west are now nearly the same. According to estimates published by the Berlin Chamber of Industry and Commerce in July, rent for office space in City West is between €14 and €21 per square meter ($1.64 to $2.46 per square foot), compared with a range of €14 and €22 per square meter (up to $2.58 per square foot) in City East.

SAD IRONY. As Berlin Mitte reasserts itself as the vibrant heart of the city, it seems inevitable that old West Berlin will lose out. In June, the German railway opened a palatial new central train station in Mitte, a short walk from the chancellery. But a side effect of the new station is that Deutsche Bahn wants to shut down Bahnhof Zoo, the old central station of West Berlin. For defenders of Zoo Station, it's not just a matter of prestige; many fear that if the station closes, hundreds of businesses in the nearby Kurfürstendamm district will suffer.

West Berliners always saw themselves as a bulwark against Communism and a center of intellectual freedom. So for many in the city, the rise of City East after unification comes as a bitter irony. For some, the march eastward has gone too far. Antje Vollmer, a longtime Green Party official and former vice-president of the German parliament, wrote a scathing editorial in the weekly Die Zeit in February, defending West Berlin's cultural heritage.

It was West Berlin theaters that premiered Samuel Beckett, Peter Weiss, and Václav Havel, she said. West Berlin's Free University was a magnet for "rebellious thinkers." It was "this West Berlin" that nurtured the longing for freedom of intellectuals in the East. "End of the sentimental journey. This old West Berlin no longer exists," she wrote.

Her passionate cry isn't likely to shift the tide. Property values in the eastern half of the city show the greatest potential for growth. And new tenants keep piling in. When German software giant SAP (SAP) erected a modern glass-fronted office building last year, it chose a location near the East's Hackescher Markt. "There just aren't as many opportunities in the West," says developer Meermann. Nor, apparently, much sentimental attachment to the half-city that once symbolized a capitalist oasis in a sea of socialism.


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