Berlin Faces Office Shortage

ONE year after the decision to transfer the Bonn government to Berlin, officials still cannot agree on a date for the move. But they do agree that the heart of Germany's future capital will be located along Berlin's Spree River in an area known as the "Spree Bogen."

According to the Berlin Foreign Investor Information Office, the demand for office space on the Spree and surrounding areas will far exceed supply, a development which the office worries will create problems for foreign businesses wanting to locate there. For many companies, especially those based in the United States, Berlin is a preferred location.

The Spree Bogen area will be home to the German parliament, a number of embassies, several museums, and many office and apartment complexes and hotels. About 10 million square meters of space is available, but the need is already double that.

The problem is compounded by a shortage of planning. To date, only a handful of private sector construction projects have made it past the drawing board.

This comes as welcome news to Ernst Freiberger, president and owner of Europe's largest pizza factory, Freiberger Lebensmittel Gmbh & Co., who had the foresight to purchase property in the Spree Bogen when few of his peers shared the belief that the Berlin Wall would eventually fall.

Today, Freiberger is again one step ahead. His office complex, which he has dubbed simply Der Spree Bogen, is scheduled to be the first large project completed in the new capital area.

Whereas other office projects will be finished in 1995 at the earliest, the Spree Bogen will open in the fall of 1993, providing the Berlin business community with 100,000 square meters of office space and 100 apartments with a view of Spree River.

Despite an enormous increase in rent prices in Berlin, Freiberger insists his rates remain "acceptable." Office space costs between DM50 and DM60 per square meter ($35-$43 per square meter). Tenants are required to lease at least 1,000 square meters for a minimum of 10 years.

Freiberger's concept, which he refers to as a "deluxe office complex with the complete business environment," includes a child-care center, conference hall, 240-room hotel, underground parking lot, theater, shops, gardens, and several quality restaurants. It is located one kilometer from the chancellor's residence and 10 minutes from Tegel airport.

So far, a mix of noted German consultancies and financial institutions have approached Freiberger about renting 40 percent of the space. Now, Freiberger says, the emphasis is on creating a more international atmosphere.

For this reason, Freiberger decided this month to approach a real estate agency with offices in New York to help recruit tenants from outside Germany.

Although, Freiberger says, some observers were surprised by his decision to enter the real estate business in such grand style, his career move was a natural one.

"It allows me freedom to create," Freiberger says, "without demanding my constant presence." As a result, Freiberger adds, he can continue to oversee his pizza company, which reported a 1991 turnover of DM350 million, and invest the necessary time and effort in his DM500 million project on the Spree.

The Spree Bogen project is located on the site where Freiberger founded his pizza company 15 years ago. Since then, he has built it into Europe's largest pizza plant. A workforce of 1,000 produces over 1 million pizzas daily.

According to Theo Schroth, board member of the Berlin Pfandbrief Bank, which agreed to finance the Spree Bogen complex, Freiberger's concept is "solid" and "promises a high degree of profitability." According to Mr. Schroth, "The tremendous demand from foreign and domestic companies for office space in Berlin proves this project will run free of difficulties."