I recently came across this for-sale listing from Fantastic Frank for a 3-room apartment in Berlin's new Am Tacheles district. Naturally, I thought to myself, "Hey, this is a beautiful apartment — now let me go all the way back to the beginning of the 20th century and better understand the history of the development site."

Am Tacheles has been called the most controversial real estate project in Berlin's modern history. Previously developed in 1908 as a high-end shopping arcade intended to rival the great galleries of Paris, the Friedrichstraßenpassage, as it was known, was an ambitious undertaking located in the city's historic Jewish quarter.

But only about six months after opening, the project went bankrupt. The existing building then went on to live numerous lives, ranging from an AEG showroom to a building used to house French war prisoners, before ultimately being co-opted by artists in 1990 as a way to save it from demolition.

It was at this point that it was given the name Tacheles, which is a Yiddish word meaning "to speak straight." Supposedly, this was a reference to the area's history as a thriving Jewish quarter and a message about political honesty (it is located in the former East Berlin, where that wasn't a thing).

For the next two decades, the site became a global symbol of Berlin's "poor but sexy" identity. The ownership vacuum created by the fall of the Berlin Wall meant that nobody really knew who owned what. This was a disaster for clear property rights and capital investment, but fortuitous for squatters who needed cheap (okay, free) space to experiment with art and techno music.

In my view, this was ultimately a net positive for the city. It created an urban vitality that nobody could have predicted, demonstrating the potential of people and cities when allowed to experiment and take risks.

But then, basically, two things happened: (1) people eventually figured out who owned what, and (2) the development potential of the site became increasingly valuable. This is the quintessential urban cycle. First, the artists and creatives come in to take advantage of cheap space. They then make the area cool. And then developers like me come in to monetize it, completing the cycle.

Fast forward to today, and Am Tacheles (they kept the name) is a new master-planned community designed by Swiss architects Herzog & de Meuron and one of the most desirable (and thus expensive) areas in Berlin. It's also quite a bit tidier there these days, though they did preserve some of the graffiti.

Returning to our 3-room apartment listing, the asking price is €1,825,000 + €90,000 (for what I believe is a parking space). At 113 sqm, this works out to ~€16,947 per sqm or about C$2,529 per sqft (for comparison to Toronto prices). As I understand it, this is well above the average new construction home prices in the area and city.

What is clear is that Berlin is no longer poor. It's global-city rich. But is it still sexy?

Cover photo and floor from Fantastic Frank

Historic Tacheles photo via Wikipedia

Am Tacheless photo and stairwell section from H&dM

I’ve written about Berlin many times before on this blog. It’s such a fascinating case study for me because of its history, its urban development patterns, and its famous techno scene.

Last month, Nick Paumgarten wrote a piece in the New Yorker, called Berlin Nights, where he dives into the city’s club culture and its reputation as the cradle of techno music. 

But in doing that, he is necessarily forced to talk about the once divided city and its unique “post-Wall” condition. When the Wall came down, the East became – as a result of its under-utilized built form – a breeding ground for the pent up energy and creativity of the West.

Here is an excerpt that speaks to the importance of those empty spaces and sparsely populated neighborhoods:

The post-Wall abundance of derelict building and excess housing was decisive. “Empty spaces allowed there to be a club culture,” Robert Henke said. “With no empty space, you get a closed-at-2 a.m., restrictive-alcohol culture.” At first, the reclamation seemed slapdash, improvisational, anarchic, as squatters took over buildings and neighborhoods and set off a period of cultural ferment. But the powers that be had been dreaming up developments for years before the Wall came down, and now—amid a boom in real-estate speculation and investment (everyone spoke of the Swedes)—empty space, and the sense of wildness that comes with it, has become harder to come by. “Flats are getting more expensive,” Hegemann said. “But we still have many free spaces. This is the secret for why Berlin is still alive.”

And here is the story of one such building:

Some empty spaces have completed their life cycles. One afternoon, I visited the old Reichsbahnbunker, a five-story fortress of reinforced concrete built by the Nazis in 1942 as an air-raid shelter. The Soviets turned it into a jail for P.O.W.s. Then it was used to store bananas and other tropical fruit. It was abandoned. In the nineties, it became an infamous techno night club, the Bunker. No ventilation, no fire exits. The government eventually shut it down. In 2003, an advertising executive and his wife bought the building and converted it into a museum to house their collection of contemporary art. They also built a glass-and-steel penthouse on the roof, to house themselves. Now the collection is open to the public, by appointment only. I joined a tour one afternoon. The guide, a young art student with a sweet monotone, took us into a cell-like space featuring giant manipulated photographs of the night sky, by Thomas Ruff, and explained that it had been the original dark room of Berlin. “It was very extreme,” she said. “It was hot, damp, loud, and dark. It was said to be the hardest club in the world. I’m sure you can imagine the things.” She gave a coy smile.

If you’re interested in cities and/or electronic music, the essay is well worth a read.

In grad school, I was fortunate enough to be a teaching assistant for a class called Urban Real Estate Economics, which was taught by Dr. Richard Voith. It was one of my favorite classes. So if you ever find yourself at the Wharton School, I would highly recommend it.

Richard is also the President of a consulting firm in Philadelphia called Econsult Solutions. And I think a lot of what they focus on would be of interest to the audience of this blog. Their focus is on urban economics, real estate economics, transportation, public policy, and – you get the idea.

Recently, he wrote a post called, Moving Cities: Berlin, where he outlines some of the transportation decisions that West and East Berlin made in the second half of the 20th century. 

What I found most interesting was how the trams of East Berlin were stigmatized to represent communism and a centrally planned economy. On the other hand, West Berlin was all about the free market, and the symbol for that was none other than the automobile. That meant that the trams had to go. 

Here is a quote that he shares from B.R. Shenoy, first published in August 15th, 1960:

“The main thoroughfares of West Berlin are near jammed with prosperous looking automobile traffic, the German make of cars, big and small, being much in evidence. Buses and trams dominate the thoroughfares in East Berlin; other automobiles, generally old and small cars, are in much smaller numbers than in West Berlin. One notices cars parked in front of workers’ quarters in West Berlin… In contrast with what one sees in West Berlin, the buildings [in East Berlin] here are generally grey from neglect, the furnishings lack in brightness and quality, and the roads and pavements are shabby…”

My favorite line: “…jammed with prosperous looking automobile traffic.”

Of course, Berlin wasn’t the only city to eschew trams in the 20th century. Detroit and Los Angeles both did exactly the same thing. But in Berlin, this philosophy wasn’t applied equally across the urban fabric. And that’s what makes it a particularly interesting case study.

I don’t know Berlin well enough to comment specifically, but Richard writes about how parts of East Berlin remained quite pedestrian friendly compared to West Berlin. That makes intuitive sense, given that it didn’t reorient itself towards the car in the same way that the West did. That being the case, I am curious to what extent those parts of the city may be benefiting today.

In any event, you should also give Richard’s article a read. You can do that here.