FINAL REMARKS

The new store opened by Galeries Lafayette on the 29th February 1996 in the old centre of Berlin could not have been better placed - "A piece of Paris coming to Berlin", the newspapers announced (e.g Frankfurterrundschau 29/2/96) - in the middle of the quarter, where the Huguenots settled in the 18th century, close to Französischer Dom (French Cathedral) and Französische Straße (French street). But how long will it take, until Berlin comes to this new symbol of Paris? It might be a fairly long time. Galeries Lafayette and the Friedrichstadtpassage are situated in that part of Berlin, which is still much more "east" than "centre". The entire Friedrichstraße is still a construction site, the opening of Galeries Lafayette was postponed twice in order to enjoy a more suitable environment. By February 1996, only about 10% of the three blocks of the Frie-drichstadtpassage was let to users. In addition to a number of other developments around the three lots at Frie-drichstadtpassage, a major development is presently under way just down the Friedrichstraße at Checkpoint Charlie - the American Business Centre. Further away on the Potsdamerplatz a massive development of office, retail and leisure facilities is now gathering momentum (Info Box 1996). In addition, there are countless refurbishment and infill speculative developments all around the city. A surplus of about 600.000 sqm of retail trade space is predicted for Berlin until the year 2000. Berlin's retail trade is not growing; in 1995 it lost 7% of its total turnover. The US department store group Maceys has cancelled their planned investment in Berlin. Moreover the futuristic design of Jean Nouvel and the luxury standard of Ga-leries Lafayette recently seem - not to use the word "sharp contrast" - a bit strange inside an environment, which is still characterized by forty years of state supported dullness and by six years of new poverty. The big housing area of Leipziger Straße for example, close to Friedrichstadtpassage, consisting of huge prefabricated blocks, looks like a monument to GDR housing policy. Well-off people mind those areas. People, who would be able and ready to buy caviar and le dernier cri do not live here. So Galeries Lafayette, before opening, silently changed their market offer and orientated more towards what people of the surrounding area might be able to afford, and they recruited all their salespersons deliberately from the eastern part of Berlin. For the moment they have said that they do not want to become the old-new shopping centre of Berlin, but to be attractive "for people, who live and work here, our original customers". There is no doubt that the shopping centre of Berlin remains where it could develop and establish during the 40 years of the division of the city - around the Kurfürstendamm several kilometres west of Mitte. A trend of customers towards the old centre is not expected before the year 2000. For some other participants of the project in Friedrichstadtpassage the future begun much earlier. The same day when Galeries Lafayette opened, Maculan announced, that they will demand proceedings of enforcement (similar to a bankruptcy) for most of their East German companies (Handelsblatt 1/3/96 and subsequently). The group had quickly and strongly grown through their East German engagement after 1989, including the acquisition of eight firms for about 160 million DM. It was estimated to have undertaken too much in East Germany, where in 1995 about half of their total turnover of 2,2 bn DM was made. The same year losses were estimated at 300 million DM, and debts at 1,5 bn DM, so neither its Austrian nor its German banks were ready to support them any longer. 5000 of Maculan's total of 8000 employees work in East Germany. About 4200 of them are affected by the bankruptcy, as well as about 5000 working for their suppliers. The Austrian part of the company does not seem to be affected, but nevertheless it was the second biggest insolvency in Austria's post-war history. One of the orders of which the future now is unsure, is a section of the Tiergarten-Tunnel. This project belongs to the plans for the movement of the Federal government to Berlin, because it forms a part of the tunnel system, which should keep the new government quarter free of any through traffic. A particular link between losses in 1995 and the Friedrichstadtpassage project was not reported for Maculan, but it was for CBC (Les Echos 29/2/96). They announced for that year a total loss of 500 million francs. 430 million francs of that was reportedly caused by the project in Friedrichstadtpassage 207. By this loss, the capital of the company was reduced to 60 million francs. As a result of this, Compagnie Générale des Eaux (CGE), as mother company of CBC with little less than two third of the shares, offered to the other share-holders of CBC to buy their shares at a rate of 105 francs, whereas the real value, according to a financial consultants expertise, was about 88 francs. The total cost of this operation to recapitalise CBC and give the company a new power to act, was about 1,3 million francs. The Berlin loss was said to have different reasons. In general there is a crisis in the real estate and construction business, a reduction of profitability, and no possibility of future growth on the German market. But the particular reason was seen in "the severe deterioration of the conditions of completion and taking over of that building in Berlin Friedrichstadtpassage". There was, what CBC described as "a disagreement with the client", which since November 1995 did not pay any longer because the execution of the works did not fit with the building contract. In other words, the building erected was not the one the client had ordered. One can hardly presume, that there has been a real difference between the architectural or functional value of the building and the needs of the client. But what possibly did exist, may be a difference between design and structural drawings at the one hand and the building really performed at the other. "The Germans need for everything a drawing", the chief site manager of Maculan said during an interview, pointing out, that this behaviour was viewed as involved, ponderous, and backwards. This may be not wrong, and this is obviously silently accepted by German construction actors too by the fact, that on German sites many things happen before the respective drawing is ready. But it belongs to the rules of the game in Germany, that the drawings have a certain status inside the total procedure from the tender to the final handover of the building. This does not mean that the drawing is a superdetermining issue, to which everyone and everything has to follow slavishly. But it is a means to work with, and it requires a particular handling. This handling is not opaque, but can be learned. Like Mr Mark Palmer, a for-mer US ambassador in Hungary, now property developer, and since 1990 engaged in Berlin, said: "There’s one thing we learned about the business here. You cannot go in blind. You must prepare to deal with [he then named out of his particular experience "property rights", but this is surely true for all other issues too - GS]. It takes time. But it can be done" (Financial Times 23/4/96). CBC announced together with the goal of their recapitalisation, a change in the business strategy of the company. They said that they intended to evaluate all their activities and to prefer a renewal of their traditional competencies (my emphasis - GS). This could be read as the announcement of a reformulation of their goal to enter the German construction market and a retirement from their activities in the German real estate market - hopefully it is not. For the internationalisation of Europe's construction that would be an unfortunate result of learning.