Brookfield’s $1.6B Bet On Berlin Tells Story Of Its Vision For Overhauling Assets

When Brookfield Property Partners paid more than €1.3B for a nearly 3M SF chunk of Berlin's famous Potsdamer Platz in 2016, it was an area with an incredible history — one that had once been a symbol of hope for Germany's future but had turned into a commercial failure. 

Once divided physically and philosophically by the infamous Berlin Wall, Potsdamer Platz became Europe's largest building project when the wall came down in 1989 — 148 acres, 50% bigger than London's Canary Wharf and five times bigger than New York's Hudson Yards, in the centre of the newly reunified country's capital. 

Completed in 1998, the portion acquired by Brookfield was half-empty, never quite capturing the imaginations of Berliners, and was sold by a fund manager that needed to raise cash. But as a huge site in an increasingly vibrant city, it had potential. 

Eight years on from its first foray into continental Europe, much of a phased redevelopment and transformation by Brookfield has been completed at a cost of more than €200M, and a new iteration of an area originally created as carmaker Daimler’s vision of the future has been largely delivered.

“Berlin is very large geographically, and Berliners really need to be drawn out of their own centres, and they also have a very strong sense of what they see as authentic,” Brookfield Properties Europe President Karl Wambach said. “So to deliver a project like this successfully, it has to fit in. It has to become part of the fabric of the city.”

Bisnow visited the scheme, which mixes offices, retail, leisure, and food and beverage, to find out how the approach taken in Berlin has drawn on Brookfield’s UK and U.S. projects, and how it will inform its transformational schemes in the future. 

In many ways, the storied area offers a narrative of Berlin. In its heyday in the 1920s, Potsdamer Platz was Europe's busiest intersection, famous in a similar way to Piccadilly Circus in London or Times Square in New York. 

It had been largely destroyed during World War II and lay derelict as the Cold War played out, when the Berlin Wall divided the city. Bomb-damaged buildings were cleared away — on the East German side, that was done to create sight lines for guards ordered to shoot people trying to escape to the west.

When the wall came down, it was a huge potential redevelopment site that was split into four chunks and sold off to commercial bidders at the start of the 1990s. One of those was bought by German carmaker Daimler after the reunification, and a team of architects including Renzo Piano, Richard Rogers and Hans Kollhoff helped reinvent the area as an office hub, with the Arkaden shopping centre its main artery.

In 2016, Brookfield teamed up with an Asian sovereign wealth fund on a deal to buy a portion known simply as Potsdamer Platz, comprising 17 buildings, 10 streets, two squares and 2.9M SF.

On acquisition, the makeup included 1.4M SF of offices, 493K SF of retail, residential blocks totalling 271K SF, 446K SF of leisure and two hotels totalling 138K SF, all clustered next to the wider Potsdamer Platz, which is also a transport hub served by the U-Bahn, S-Bahn, regional express trains and bus services.

But while Potsdamer Platz may have been at the heart of Berlin, it was certainly not the heart of a city that lacks an obvious centre. The retail offer was tired and in close proximity to larger malls, the office occupancy rate was at an alarming 53% and the area lacked personality.

Brookfield, which had pivoted from an office-led developer to one focusing on mixed-use schemes, felt that for its first European venture, it had spied an opportunity to reinvent a major European hub based on many of the lessons it had learned in the U.S.

“The profile of the office occupiers was very corporate and focused around a smaller number of large single tenants, so we felt there was clearly value to be added. But the first job was to solidify the office population,” Wambach said. “We wanted to move to a more multitenant model to diversify and de-risk the office element. We have been able to increase occupancy into the mid-80% and expect to be at over 90% in the next 12 months.”

At the same time, average rents have increased from around €23 per SF to nearer €50 per SF, he added. In October, flexible workspace operator Industrious confirmed that it would make its debut in the German market with 59K SF in the Atrium Tower at Potsdamer Platz, bringing the first flexible coworking offer to the scheme.

Much has also been done to improve the public realm, closing off some streets to create pedestrian walkways and introducing more bars, cafés and retailers in a process that is nearly complete, with Wambach stressing the importance of a leisure offer to attract the office population, local residents and tourists. Visitor numbers are quite evenly split between German and international visitors.

An existing theatre, two nightclubs, a casino and a multiscreen cinema meant that Potsdamer Platz already had a mature leisure offer, now better linked by a largely car-free environment. But the retail was not in such healthy shape.

Indeed, perhaps the most obvious change is the €200M spent on Arkaden, now rebranded as The Playce, with construction starting in January 2020 and completed in September 2022.

“Berlin’s mall market is overcrowded,” Wambach said.

There were 69 malls in the city when Brookfield bought the scheme and 72 now, including the much larger Mall of Berlin just across the road. Brookfield's is the ninth largest.

“We reopened with just a few retailers, and we are in the process of proving the concept, as we have now got around 80% of the space open, with 96% leased,” he said.

Key to the transformation was to rip out the vertical links between the ground and upper floors to clear the central internal passageway and to turn the environment into something more akin to a modern-day arcade than a mall. A distinctive glass roof was retained, while some retailers trade over two floors, and leisure and offices sit above some others.

The first European NBA store, a sustainability-led Peek & Cloppenburg department store, Dutch-based games operator Game State, UK cocktail bar The Alchemist, Prague-based food hall Manifesto Market, UK bowling concept Lane7 and Amsterdam-based leisure attraction Upside Down have all opened since.

Instagram-renowned café EL&N is to open shortly, while the delayed Mattel superstore is expected to open in the first quarter. A more everyday, service-based retail offer sits a level below and connects to the train and metro concourses.

“The key was to differentiate from the other malls and to create an environment that had lots of different activations and which offered visitors a variety of urban moments,” Brookfield Properties Europe Vice President Katharina Treiber said. “We wanted to create a unique inner-city space with retailers who were ideally first in Europe, if not first in Germany or at least first in Berlin.”

Several of the new openings, including UK duo Lane7 and The Alchemist, have only recently begun trading, so the location is still establishing its presence and beginning to achieve a critical mass of retail, food and beverage, and leisure offers. Brookfield also said the ongoing rejuvenation of The Center Potsdamer Platz, previously the Sony Center, by Oxford Properties opposite its scheme will add to the draw for Berliners and international visitors.

To drive the transformation, Brookfield Properties has leaned in on its experience creating mixed-use projects in the U.S., and Treiber said global trends are aligned, pointing to the City of London strategy and the transformation of its own Canary Wharf estate in London, both of which are pivoting away from office-only schemes to bolster their leisure, hospitality and residential.

“We would describe this as a polycentric strategy, drawing from our toolbox of placemaking but with local nuances,” Wambach said. “The days of developers looking at their schemes in isolation are also over, I think. We need to work together for the greater good of areas, to create diverse and unique destinations.”