November 16, 2017

SOS, We are being displaced!

Eckart Eyser is a board member of the Humboldthain Technology Park. The entrepreneur himself has been based there for many years with his company. The area around the former AEG site, says Eyser, had been dormant for a long time. But for some time now he has been observing with growing concern that even long-time users are leaving the site and moving to the outskirts of the city because commercial rents are rising and sometimes also because they no longer fit the “profile” of the Gewerbesiedlungs-Gesellschaft (GSG). Instead, spaces are increasingly being created for start-ups and coworkers. This is the trend and is highly profitable for landlords, because many small spaces can be rented out better than a few large ones. In the interview, we talked about the pros and cons of this development and asked how the city (policy) can deal with it.

Viktor Hildebrandt: Mr Eyser, the demand for office and commercial space is increasing in Berlin. Do you also feel this increase here at Technologie-Park Humboldthain (TPH)?

Eckart Eyser: Indeed! The location is just awakening from its slumber, so to speak. Because of its central location, the commercial spaces in the TPH are currently in great demand. The Gewerbesiedlungs-Gesellschaft (GSG), which owns a large part of the space here, already has waiting lists of potential future tenants; and even new buildings that have only been on paper so far are reportedly already fully let.

What are the consequences of the growing demand?

This has quite different effects. First of all, it means that GSG is now investing more in the refurbishment and renovation of the existing buildings in the TPH. In the past, they were rather hesitant. But now that the space here is in demand and the real estate company does not have to worry about renting, the decision-makers are apparently willing to put up the necessary money. With these measures, they certainly also want to further increase the value and attractiveness of the buildings. The investments are of course fundamentally sensible and in some cases even bitterly necessary. Especially in the buildings on the former AEG site – the heart of the Technology Park directly opposite the Humboldthain – some things need to be renewed due to their age. At the same time, the high demand and the modernisation of the buildings naturally lead to higher rents. And some of the long-established companies can no longer afford them. These companies, some of which have been based here for 30 years, have to move. In addition, other companies will have to relocate because, as GSG puts it, they no longer “fit into the concept”. So basically, we can currently observe a gentrification process here in TPH. The only difference is that in this case the gentrification does not – at least not yet or not primarily – affect the residents and the neighbourhood, but the companies.

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Gentrification always means displacement. Who is displacing long-established businesses?

On average, the commercial spaces on offer are becoming smaller and smaller. Of course, this does not exactly suit manufacturing companies. Small spaces are much more suitable for start-ups whose employees can usually be counted on one hand and who usually don’t produce anything physical – at least not here in Berlin – and therefore don’t need large machines or other equipment. For example, the coworking space Ahoy has been here for some time.

And soon another start-up centre called Grow will be built directly opposite the former AEG site. This trend is spilling over from Mitte to Gesundbrunnen and Wedding, so to speak. Recently, there are other such spaces in the vicinity of the TPH, such as the Factory in Bernauer Straße or the Unicorn in Brunnenstraße.

Berlin is known as the start-up metropolis of Europe and is also quite proud of this label. You don’t seem very enthusiastic about the start-ups.

Like every coin, the promotion of start-ups at the expense of long-established companies has two sides. Start-ups are of course totally hip, and many of the founders certainly have good ideas. I don’t want to deny any of that. The way the economy is developing right now, spaces for start-ups are definitely to be welcomed. From GSG’s point of view, this development is also obviously advantageous, because you can make more profit with many small spaces than with a few large ones. But one should not close one’s eyes to the downsides of this development and above all ensure a good balance. From the perspective of the district, for example, the situation is quite different: Most start-ups generate only small revenues and no profit at all, or at best little profit, in the first few years. They are financed by investors and can therefore afford relatively high rents for quite small spaces in attractive locations. But they pay hardly any taxes to begin with and create very few jobs subject to social security contributions. At the same time, those start-ups that actually work successfully and make the leap to profitability will eventually need their own, larger offices because they suddenly hire more employees and no longer want to work wall to wall with other companies. But the more small-scale office space that congregates in a district, the less likely it is, of course, that the growing companies will stay there. And those who move away also pay their taxes in other parts of the city or in other regions.

“Like every coin, there are two sides to promoting start-ups.”

Besides, founders are notorious self-exploiters. Most of them are so focused on their own business idea that they walk around with blinkers on, so to speak, and look neither to the right nor to the left. Not only does their private life suffer from this, but it also means that these people are usually not involved in the location and/or the neighbourhood. Especially here in TPH, however, this would be quite important, because in the neighbouring neighbourhoods there are very high unemployment rates and many poor families. This is not to say that all established companies are permanently socially engaged; but the general willingness to take part in small initiatives, such as trial internships for pupils, is greater than with most start-ups. The current development is also problematic from the point of view of the companies, which can no longer afford the rents here. GSG is certainly trying to support these companies in their search for a new location, but that is not the end of it. The employees – if they are well trained and have alternatives – think twice about whether they want to commute to the outskirts every day or prefer to change employers. Some companies also need special certification for their work and production sites. The necessary measures and the certification itself are associated with great effort and high costs. This is only worthwhile as a long-term investment. If such a company suddenly has to change its location, the worst case scenario is insolvency.

How does politics react? Is there a strategy for dealing with the dark sides that you have just described?

To be honest, I don’t know whether politicians and administrators – both at the state and district level – are even aware of this problem. Gentrification is always a gradual development and that’s why you have to listen and look carefully – otherwise you don’t notice it for a long time or you don’t perceive the individual events as coherent.

“You should encourage ownership instead of renting.”

As a board member of the TPH, I am naturally more involved here than others. Some of the entrepreneurs have come to me. “Mr Eyser, have you heard? We’ve been given notice!” First one came, then the second, the third, the fourth. The fifth and sixth made me prick up my ears. I hope that those responsible in politics and administration will now react.

How do you think we should deal with this development?

I am rather cautious with my expectations and recommendations, because I am not a politician and have only a limited understanding of political structures. But: I would of course like to see a better balance between space for start-ups and space for producing, larger companies that are firmly anchored here. The TPH has long been considered one of the commercial locations in Berlin where companies can develop and grow. In my opinion, we should hold on to that. So that we don’t misunderstand each other: It is not my intention to reverse the current developments or to get in the way of them. I am convinced that the current changes also offer new opportunities and open doors. But for that, we have to steer them in the right direction.

What could that look like?

I think one should promote ownership instead of rent, for example, especially today, since GSG is no longer in municipal hands, but is organised purely as a private company and therefore also works even more profit-oriented – no matter what that means for the district and the long-term tenants. Entrepreneurs who own the land or the premises have greater planning security and are therefore also willing to invest in the long term. They tend to be more interested in the urban environment and their neighbours, which, as I said, would be important especially here in one of the poorer corners of Berlin.

It is very interesting that you suggest promoting ownership as a response to rising rents and displacement. Some time ago, as part of this series of talks, I spoke with Kristien Ring about building groups. She too highlighted the importance and benefits of ownership – it was about home ownership. So there seem to be several parallels between housing and commercial space.

That can be good. Another point – and here, too, a parallel can perhaps be drawn with the community in the neighbourhood – is, of course, the promotion of cooperation between the companies here at the location.

Isn’t that one of the core tasks of the association you chair?

Right. There are also always joint projects and cooperation; and we have organised events and seminars from time to time. However, these efforts could be expanded significantly. The problem, however, is that of the 160 or so actors we count in the Humboldthain Technology Park, just about one in ten is also a member of the association. That’s why membership fees are very low today and we can’t pay anyone for their work. I think many good ideas have come to nothing because we would have to organise their implementation alongside our own day-to-day business. Most of the other Future Places in Berlin get money from the state of Berlin to do community building. Of course, that makes things easier. In addition, we have to ask the GSG for permission for many projects. I don’t want to imply that the GSG is somehow refusing, but it is clearly an extra effort and you are constantly standing in front of the door as a supplicant. Irrespective of the lack of financial support for the association’s activities, as an association representing the interests of local businesses we would of course like to be more involved in the political process. Today, the state of Berlin talks to the GSG and the businesses in the TPH are then informed, by whatever means. We would very much like to be at the table when current developments in the TPH and their effects are discussed.

Thank you very much for the exciting interview!


November 16, 2017

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