Hamburg proposes €40.1 million acquisition of Hammerbrooklyn Pavilion for startup hub

The Hamburg Senate has proposed investing €40.1 million to acquire and convert the Hammerbrooklyn Digital Pavilion into a publicly backed innovation and startup centre.

The plan would transfer the building from private ownership to Start-Up Labs Hamburg, a company majority-owned by the city. The new centre would bring together office space, business support, investment networks, university programmes and events at a single location in the Hammerbrook district.

Despite reports describing the purchase as completed, the transaction remains subject to approval by the Hamburg Parliament. The proposed expenditure has been added to the city’s draft budget for 2027 and 2028, which is expected to be decided in December.

The Senate has requested an investment grant of €40.135 million, while a further €300,000 would cover the operating deficit projected for the first year. Hamburg’s initial public commitment would therefore amount to approximately €40.44 million.

The pavilion itself carries a proposed purchase price of €31.4 million. The remaining expenditure includes approximately €575,000 for notary and land-registry costs, €1.86 million in property transfer tax, €2.25 million for conversion work, €1.63 million for furniture and equipment and a one-off ground-lease payment of €2.43 million.

Hamburg already owns the land beneath the building. The planned transaction therefore covers the pavilion and the associated leasehold rights rather than the acquisition of the site.

Start-Up Labs Hamburg would sign a 60-year leasehold agreement with the city’s property management agency. According to the Senate, the purchase price was assessed independently and reflects the building’s market value.

The proposal only covers the Digital Pavilion and not the wider Hammerbrooklyn development. The property has approximately 6,860 square metres of gross floor area, of which around 6,000 square metres are usable.

The building will require modifications before the new centre can begin operating. Planned work includes changes to internal layouts, upgrades to restaurant and sanitary areas and improvements to accessibility and fire safety.

The city intends to divide the available space into three sections of broadly similar size. One third would accommodate organisations and programmes supporting the startup ecosystem, another third would provide offices and flexible working areas for young companies, and the remainder would be used for events, catering and building operations.

Hamburg wants the centre to function as a single point of entry for entrepreneurs. Founders would be able to access advice, public funding programmes, office space, investors and corporate partners before being directed to more specialised facilities elsewhere in the city.

Organisations expected to be represented include Startup Port, the startup advisers of development bank IFB Hamburg, Startup City Hamburg and providers of public grant and equity programmes.

The city also plans to attract business angels, venture capital networks, established industrial companies and corporate venture builders. The objective is to reduce fragmentation across Hamburg’s existing startup support system and create a more visible point of contact for entrepreneurs and international investors.

Hamburg currently has around 1,540 active startups, according to the city’s 2026 Startup Monitor, making it Germany’s third-largest ecosystem after Berlin and Munich. A total of 203 companies were founded during 2025, although the report also identified challenges in converting entrepreneurial interest into durable businesses.

One of the proposed anchor tenants is Impossible Founders, a startup factory focused on science-based companies in areas including green technologies, advanced materials, artificial intelligence and data science.

Impossible Founders was selected as one of ten projects supported through the German federal government’s Startup Factories programme. Its financing includes up to €10 million from the federal government and another €40 million from Hamburg-based foundations and companies, including the Joachim Herz Foundation, the Michael Otto Foundation, Haspa, Nexperia and the Otto Group.

That €50 million financing package is separate from the city’s proposed investment in the Hammerbrooklyn property. However, placing Impossible Founders inside the pavilion is intended to provide the new centre with an anchor organisation and an initial pipeline of technology companies.

The project’s financial plan assumes a gradual increase in occupancy. The first tenants are not expected before 1 April 2027, provided that the purchase, leasehold agreement and refurbishment work proceed on schedule.

By the end of 2027, the city expects approximately 45% of the areas reserved for ecosystem organisations and 30% of the startup office space to be occupied. Over the longer term, the business plan assumes average occupancy of 65% for startup offices and 95% for anchor tenants.

Around half of the centre’s rental income is expected to come from those anchor organisations. Startups would generate approximately one quarter, with the remainder coming from events, catering and other tenants.

The city plans to charge market-based rents while offering young companies flexible contracts and adjusted conditions. This structure reflects the centre’s economic-development role, rather than treating the property solely as a conventional office investment.

The business plan forecasts approximately €500,000 in revenue and €800,000 in expenditure during 2027, explaining the requested €300,000 operating subsidy.

From 2028, the centre is expected to cover its operating costs, with projected annual revenue of €1.28 million and expenditure of €1.12 million. The current plan does not include further annual operating subsidies, although the projections will depend on occupancy and event income.

The Senate acknowledges that the acquisition would not generate an adequate return if evaluated exclusively as a property investment. Its economic case instead rests on the potential contribution of additional startups to employment, innovation and tax revenue.

According to the city’s model, retaining an average of one additional successful startup in Hamburg each year could generate €106 million in extra gross value added and €10.5 million in tax revenue over 20 years. These figures are projections rather than guaranteed returns.

The public takeover would also mark a change in the history of Hammerbrooklyn. The pavilion was originally built as the United States’ contribution to Expo 2015 in Milan, before being dismantled, transported to Hamburg and reconstructed near the city’s wholesale market and the Deichtorhallen.

Factory moved into the building in 2021, operating coworking areas, offices and event facilities. The project was intended to connect startups, freelancers, established companies and public institutions.

That private operating model is now being discontinued. Factory has announced that campus memberships and permanent coworking desks will end on 31 October 2026 as the company shifts away from its existing coworking format.

Businesses holding longer-term office leases may remain until their contracts expire. The city plans to examine whether some of those agreements can be transferred to the new operator, depending on whether the tenants fit the future centre’s profile.

The timetable creates a potential gap of at least five months between the end of Factory’s membership model and the first expected occupancy under the public programme.

The proposal has also drawn questions from the opposition. Hamburg’s CDU has requested more information about the building’s valuation and whether a city-backed centre can succeed after the private project failed to develop as originally expected.

Economy Senator Melanie Leonhard has described the site as an opportunity to consolidate Hamburg’s startup community and give the ecosystem a central address.

The final decision will rest with the Hamburg Parliament. If approved, the acquisition would transform Hammerbrooklyn’s privately operated central building into publicly financed startup infrastructure.

Its success will depend on whether the city can attract tenants, coordinate programmes that are currently spread across Hamburg and achieve the occupancy and revenue levels assumed in the business plan.