The amazing revival of East German cities such as Leipzig and Dresden in Saxony offers important lessons for towns in Britain that have lost their economic roles and suffered from the resulting physical dereliction and unemployment. After decades of alien rule by the Nazis and then the Soviet Union, reunification in 1990 at an over inflated exchange rate led to the collapse of almost all of the industrial base; 90% of Leipzig’s manufacturing jobs went in a couple of years leaving a landscaped scarred with empty mills and railway yards. Unemployment soared and many of those who could left for the West. This caused the population to tumble to less than 500,000 in a city that had 700,000 residents in 1939, with a massive infrastructure of utilities and schools to maintain.
Civic leadership
Yet only 25 years after the Berlin Wall came down, in a week long study tour with the Urban Design Group we experienced vibrant and colourful centres full of people shopping in stylish shops, sitting out eating and drinking, travelling around on modern trams, and no longer feeling second-class citizens. We stayed in one hotel in Bautzen, a town of under 30,000 residents, on a modern industrial estate let to high-tech businesses that had formerly been a plant for making lorries. Of course part of the explanation lies in the flow of public funds from the West to the East, where a quarter of Germany’s population of 80 million live. Funds have gone into new infrastructure like Leipzig’s massive trade fair complex connected by a new metro that tunnels under the city centre and high quality townscapes. BMW’s new plant required building another ring road. Financial aid will come to an end in 2020.
Funds have also been invested by the state investment bank KfW primarily to help small businesses reach wider markets, and they must take some credit for the profusion of wind and solar farms around the cities, as renewable energy is one of their priorities. A former coal mine outside Goerlitz is now a landscaped country park with a vast lake and the old coal cutting machine remains as a vast sculpture. A lot of money has also been invested in rebuilding historic buildings, such as the centre of the Old Town in Dresden, bombed to smithereens in 1945 in the last weeks of the war, and made memorable by Kurt Vonnegut’s account Fahrenheit 451. Now restored as a major visitor attraction, modern hotels have been developed behind recreated facades, with parking underground. Germany’s first garden city in the suburbs is a short tram ride from the centre, and is being extended with energy conscious self-built homes. Indeed while we were there three quarters of Germany’s energy apparently was generated from renewables.
Less obvious but just as important for urban renaissance has been the huge upsurge in creativity and civic pride exemplified by the reuse of old industrial buildings in part of Leipzig known as Plagwitz that was formerly regarded as a ‘no-go’ area. Laid out with railways and canals in the late 19th century by a developer called Heine, after reunification it became totally dead. The City Council, with very limited funds, has focussed on drawing up the planning framework that determines what uses should go where. It reconnected a smelly canal, and has introduced a series of green fingers along the old industrial railway lines and restored canals. The wild landscape has transformed the look and appeal of a previously abandoned area, and made it an attractive place for ‘yuppies’ and creative people.
Entrepreneurial regeneration
Initially the city suffered from new housing investment in surrounding small towns. By designating almost every building as ‘historic’ – and Leipzig fortunately escaped extensive bombing- generous tax reliefs drew in money from the West. Regeneration started with the renovation of the fine 19th century middle class housing in the inner city. Investors could claim depreciation of 10% a year against their income tax. Rents tumbled as supply expanded, but the beneficiaries have been people living in the heart of the city, which is now seen as very affordable. There has been no need for social housing, with a surplus of post war flats on the edge, some of which have been demolished, while others have had their facades improved.
The process of regeneration has attracted the interest of entrepreneurial developers like Bertram Schultze, whose conversion of the Spinnerei, formerly the largest cotton spinning mill in Continental Europe, into a kind of ‘arts factory’ has won world wide acclaim. Trained as an architect and economist, he could see that the prospects for development in the former Eastern bloc by proceeding incrementally converting buildings that were well-built originally. He succeeded in persuading some friends to invest with him in buying the vast property for a ‘knock-down’ price of 4.3 million euros off the agency that had taken over the businesses that were formerly state owned. The mill contained some 60,000 sq metres of floor area, but a similar amount of open space. By then the Western Banks had decided against investing any more funds in the East, so he had to look to local resources. Fortunately in 2003 the Leipzig Sparkasse, or savings bank, decided it would be good to fund the conversion of part of the space into a large gallery for local artists. By attracting some big names at first, others followed, and today there are 120 different studios and galleries, of which 100 are resident. Rents are kept as low as possible, with commercial uses such as call centre paying much more than artists who take over bare space.
Schultze had started by developing another building that was contaminated with zinc, but which now contains housing above offices and a restaurant overlooking the canal. This enabled him to build up the assets that made the Spinnerei project possible, where over 20 million euros has been invested over nearly two decades. Commitments to take space on short term leases are used to fund the renovation, investing typically five times the expected annual rent. He was able to tap some public funds through packages that enabled the City of Leipzig to draw down public funds from the region and the European Union. He is now embarking on an even bigger project in Nuremburg to convert a former factory into a centre for organisations involved in renewable energy. Interestingly, though German banks still write-off Leipzig because of their experience, investors in other countries have seen what has been achieved and are much keener to be involved. But the real secret has been tapping the energy and resources of the younger people who have trained in the city, and love what it offers them.
Conclusions
A flexible planning framework driven by opportunistic City Councils, making the most of existing assets like universities or historic buildings, has enabled cities in East Germany to overcome their disadvantages and attract entrepreneurially minded individuals. Affordable housing and a lively cultural scene helps ensure they stay. A financing system that backs SMEs has helped replace lost jobs and rebuild the ‘common wealth’.
Dresden Old Town restored
Frequent trams tie Leipzig together
