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The Largest Start-Up Ecosystem of the New Berlin

June 12th 2019

By The New York Times

Most people who arrive by plane in Germany’s capital land at Berlin Tegel Airport, an austere, hexagonal airport beloved by locals for its no-frills aesthetic and efficient design.

But after decades shuttling air travelers in and out of the city, including more than 22 million in 2018, the airport, once an integral part of the Berlin Airlift, is preparing for its next chapter.

Shortly after the new Berlin Brandenburg International Airport opens in the fall of 2020, Tegel will shut down. The nearly two-square-mile airport will become Berlin TXL, a complex that will include much-needed homes, a vast research and industrial campus and a landscaped park, less than five miles from the leafy, canal-lined city center.

“In Berlin, our biggest problem is lack of space for new offices or residences,” said Kai Mende, a managing director for CBRE in Berlin. Office vacancy in Berlin was 2.2 percent in the fourth quarter of 2018, the lowest of any major German city. “In principle, the new Tegel project makes a lot of sense for Berlin,” he said.

The transformation of Tegel is due to be finished before 2040 and cost several billion euros, said Philipp Bouteiller, chief executive of Tegel Projekt, the state-owned company that is developing and managing Berlin TXL.

For the commercial component, known as the Urban Tech Republic, parts of Terminal A will be converted for use by the Beuth University of Applied Sciences and up to 2,500 students. The Berlin Fire and Rescue Academy will also move into the terminal’s airport hangars.

Terminals C and D will become meeting areas and work spaces for established manufacturing companies as well as start-ups focused on urban technologies.

“The idea is to cover the whole value chain,” said Mr. Bouteiller. “The students at the research center are the honey pot for start-ups, and industry is the potential client for start-ups.”

Both the established companies as well as the start-ups in Berlin TXL will seek to reap the benefits of increased investment in Germany. Companies based there can employ talent from all over Europe without having to negotiate work visas, something companies based in Britain will contend with if the country leaves the European Union, a process known as Brexit.

Many companies are not waiting to see how Brexit plays out. In 2017, 152 firms moved from Britain to Germany, up more than 20 percent from 2016, the year Britons voted in favor of Brexit, according to the German government’s trade and investment agency.

In recent years, Berlin has emerged as Germany’s tech center as international giants like Amazon and Wayfair set up shop in the capital, alongside scores of start-ups.

Start-up investment in Germany climbed to €4.6 billion in 2018, up 7 percent from the year before. Berlin attracts so many start-ups because of the low cost of living and office space compared with many other German and European cities.

Berlin TXL “is set to become the largest start-up ecosystem of the new Berlin,” said Michael Müller, Berlin’s mayor.

The Tegel site was originally used for rocket testing during World War II. In 1948, a runway was hastily built in 90 days to help two other city airfields during the Berlin Airlift, when Allied forces delivered goods directly to West Berlin, breaking the Soviet blockade of the city.

After the fall of the Berlin Wall in 1991, discussion began about creating a new airport for the unified Berlin. Brandenburg Airport was originally set to open in 2011. But a series of problems including a faulty fire safety system, miles of incorrectly installed cables and a shortage of check-in kiosks kept pushing out the opening date.

The numerous Brandenburg Airport delays have become a running joke for Berliners. The airport flight monitors have shown flight information for years, and empty trains run into the airport’s station every weekday to keep it properly ventilated. Yet not a single traveler has used the ghost airport.

“The greatest challenge for Berlin TXL has been the moving goal post in terms of opening,” said Mr. Bouteiller.

Now, however, there is no indication of further delay, Mr. Bouteiller said. In November, detailed plans for the commercial and residential sectors were unveiled to the public. Construction is planned to start in the spring of 2021, within six months of the old airport’s closing.

Berlin TXL will create about 20,000 jobs, according to the latest study carried out by Empirica, a German research and consulting firm. The overall number of new employees will generate an annual gross value added of €2.2 billion, or $2.5 billion, according to the study.

Berlin TXL is one of the largest airport conversion projects, but not the first in Germany. Berlin Tempelhof Airport, transformed by the Nazi government in the 1930s and later used as a military base by the United States, was closed in 2008. Now, it is a giant public park on the southern edge of Berlin’s artsy Kreuzberg neighborhood.

Elsewhere in the world, airports in Denver and Austin, Tex., have been converted into residential housing. The site of Malmo Bulltofta Airport in Sweden has been transformed into a shopping and entertainment center, and Hong Kong’s Kai Tak airport has become a cruise ship terminal.

Berlin TXL is part of a broader effort by Berlin to re-establish itself as the industrial center of Germany. After World War II, many companies left and the number of industrial jobs dwindled, a trend that continued after the reunification of East and West Berlin.

“With its industrial core, the future Urban Tech Republic will create a wonderful opportunity for the German capital city to play a leading role in the international market for urban technologies of the future, a market that is expected to double over the next decade to an annual volume of €5.4 billion,” said the mayor, Mr. Müller.

Another behemoth project near Berlin TXL will help strengthen northwest Berlin as the city’s industrial innovation sector. Called Siemensstadt, this 70-hectare, €600 million project stands on the original site of the Siemens headquarters, the 172-year-old German industrial manufacturing and technology company.

In addition to expanding Siemens’s footprint, Siemensstadt will connect universities, established companies and start-ups doing business in Siemens’s various core industries, which include power generation and distribution, intelligent infrastructure for buildings and mobility solutions for rail. Construction on this project is planned to start in 2021.

Many of the new technologies in Berlin TXL will be discreet, said Mr. Bouteiller. For instance, the lampposts will also come with 5G cellphone antennas, traffic and parking cameras, Wi-Fi and e-charging capabilities.

Berlin TXL will include cultural amenities as well. The director of Berlin’s nightclub commission, Lutz Leichsenring, recently toured Tegel Airport with the German culture minister.

Mr. Leichsenring was struck by a “noise protection hall” in the airport that could work well for live performances, as well as buildings with machine rooms in their cellars that looked “a bit like submarines” and several buildings with flat rooftops, which could make “great event spaces with nice views.” But beyond performance venues, artists will need production studios and rehearsal and work spaces, he said.