Some of the biggest and most aggressive players had moved in even before the city was officially reunited and designated the future seat of national government. Shortly before the Wall came down, Edzard Reuter, chief of Daimler-Benz, began negotiations to buy fifteen acres in the Potsdamer Platz from the Senate of West Berlin. In July 1990 Daimler bought the parcel for DM 92,873,550 (about $55 million), which real estate experts estimated was between one-third and one-seventh of the land’s actual market value. When details of the deal became known, there was a great hue and cry. The Momper regime, people said, was selling off the symbolic heart of Berlin at a bargain-basement price to a company known to have worked hand-in-glove with the Nazis. In a typical Berlin gesture, members of the local leftist scene erected a gallows in the square and “hanged” a Mercedes star. A leading architectural reporter spoke of “the mistake of the century.” City planners worried that the Daimler deal would set a precedent for future sales and undercut the possibility of coherent planning for the redevelopment of eastern Berlin. In response to the barrage of criticism, the Momper administration responded that the city had to be accommodating toward heavyweight corporations like Daimler, which in the past had been reluctant to invest in West Berlin. Local leaders also made much of the fact that Edzard Reuter was the son of Ernst Reuter, West Berlin’s revered former mayor. Reuter himself argued that his company’s decision to make a major commitment to Berlin would send an important message to the rest of German industry. His colleagues from other big firms, he confided, were following Daimler’s Potsdamer Platz project “with the greatest interest,” asking themselves, “Will large companies be welcome at all in the new Berlin? Or will Berlin remain little more than a
The concern that the Daimler sale might set a precedent proved warranted. Shortly after it was consummated, another large section of the Potsdamer Platz was purchased by the Sony Corporation, also at a bargain price. However, Sony’s decision to build its European headquarters in Berlin, like Daimler-Benz’s commitment, could be taken as a sign of faith in the city. Once the Mercedes and Sony logos were shining like beacons above a rebuilt Potsdamer Platz, could anyone doubt that Berlin was “back”?
In the meantime, the activities of the initial big investors, which also included American and French interests, ignited an explosion in real estate values and rents. Prices for choice properties in the city center had doubled following the Wall’s opening, and they doubled again in the months following the Bundestag vote. Berlin suddenly went from having the lowest real estate costs of any major German city to vying with Frankfurt and Munich for the highest. By 1992, some commercial tenants were paying twice what they would for similar property on New York’s Fifth Avenue. While this surge in prices was good news for Berliners with property to sell or rent out, it was bad news for old-line tenants, many of whom had been enjoying low rates because of rent-control. If Berlin’s transformation was not to increase the gap between rich and poor, and between east and west, ways would have to be found to cushion the socioeconomic effects of unification.
This was not the only challenge that the city faced. Over the past forty years East Berlin had fallen drastically behind West Berlin in terms of infrastructure development. Telephone lines, sewers, public transportation networks, and road surfaces were all substandard. The task of renovating the east and knitting the two halves of the city back together was enormous—the urban equivalent of reconstructive surgery on a partly gangrenous patient. In this regard, Berlin was a microcosm of the new Germany. As
