Berlin weighs plan to build retail center U.S. developers seek Cold War site

July 14, 1991|By Ian Johnson | Ian Johnson,Special to The Sun

BERLIN — Berlin--For decades, Checkpoint Charlie was an enduring symbol of the Cold War. Today, it's the proposed site of an all-American office and retail center, and part of the "Billion-Mark Mile" -- symbols of a new era in Eastern Europe.

Mark Palmer, a 52-year-old banker and developer who is a former U.S. ambassador to Hungary, heads one of the most ambitious projects along the bustling Friedrichstrasse. His New York-based company, the Central European Development Corp., plans a million-square-foot development featuring U.S. stores and corporate offices where Checkpoint Charlie's guardhouse once stood.

"There was initial hesitation, but more and more American companies are coming," said the smartly dressed and confident Mr. Palmer, CEDC's managing director.

Still, Cold War remnants present problems for any company. Property rights are often in dispute, and a cumbersome bureaucracy can delay development. And new investors may be held responsible for cleaning up past environmental damage.

As a recent report by the American Chamber of Commerce in Germany stated, "Investors are not willing to build on a piece of property when they don't know who owns it."

The report noted that many large foreign companies have expressed interest in moving into Eastern Germany. But few -- with the exception of Coca-Cola and Rolls Royce -- have followed through with concrete investments.

The report called for changes in the laws of the five state governments in eastern Germany. Its proposals were to enact tax incentives, take responsibility for environmental problems at factories and relax restrictions that keep stores closed from noon Saturday to Monday morning.

Much of the new development in Berlin has been focused along the Friedrichstrasse, a major north-south street. The area, long neglected as a border outpost of barbed wire and concrete, is becoming a major business center and boasts some of Berlin's most expensive real estate. One coming attraction is Galeries Lafayette, a French department store.

The site for CEDC's $250 million project is now a large, paved lot.

The crossing's famous Allied guardhouse -- where U.S. and Soviet tanks faced off for hours during a 1953 workers' uprising -- has been sent to a museum. The East German border crossing shelter and office have been removed. All that remains are a few pieces of the Berlin Wall and a watchtower, which have been preserved as monuments.

CEDC wants to fill this hole in Berlin's landscape with four buildings designed by U.S. architects and has received the support of city officials. Several U.S. companies, which have not yet been identified because the project's details have not been made final, will have their Central or Eastern European headquarters in the project, Mr. Palmer said. Construction could begin as early as fall.

Mr. Palmer's company, which also is involved in projects in Czechoslovakia and Hungary, has avoided using land that was expropriated by the Communists and might have prior owners with legal claims.

The project on the Checkpoint Charlie site, for example, is to be built on 4 acres of land without controversial property ownership. All owners have been tracked down, and Mr. Palmer has even gone on German television to ask owners to register now for compensation.

"We wanted to be sure that the property question is settled so we can build with confidence," Mr. Palmer said.

CEDC, which owns and develops property, has tried to overcome other difficulties by keeping in personal contact with government officials and simply by having patience, said Mr. Palmer, who was Hungarian ambassador from 1987-1990.

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