Developers Are Converting Penitentiaries Into Apartments

Rummelsburg prison in Berlin was converted into 147 apartments. PROFI PARTNER / Maruhn Immobilien

Almost a century ago, left-wing revolutionary Karl Liebknecht was thrown in jail for staging an antiwar protest in the German capital. His prison now has new inhabitants, but unlike the bearded firebrand, they quite like it there.

The jail in Luckau, a small town outside Berlin, has been turned into apartments by property developer Bärbel Kohlstock, who used ample public subsidies for the €2 million ($2.7 million) conversion. Units in the 300-year-old, redbrick complex went on the market last summer and have been renting for €202 to €540 a month.

Siegmund Borchert, a 53-year old resident whose balcony overlooks the former prison yard, says he had "a strange feeling" the first time he visited the building. But "the concerns quickly evaporated" after he caught his first glimpse of the interior's modern, comfortable makeover, he said.

Luckau isn't alone. Falling prison populations and a frothy property market boosted by low interest rates and a healthy economy have come together in a quirky German real-estate trend: the conversion of penitentiaries into residences.

Developer Steffen Dörre says the prison he aims to convert in Sondershausen, Thuringia, "looks like an Italian fort" with a castle and four towers. He wants to install 12 flats in the mid-19th-century building in a project he hopes to finish in 2016.

Many prison complexes in Germany were built in the 19th century, often featuring details like cornices and high ceilings that have raised their appeal in a country that lost much of its period architecture during World War II.

Developers in other countries also have converted prisons into hotels. For example, the Liberty Hotel in Boston used to be the infamous Charles Street Jail that housed the Boston Strangler.

In Germany, where the market for housing in major cities is becoming increasingly tight, jails-turned-residences are more common. In Berlin, a €34 million riverside development turned Rummelsburg prison into 147 apartments, with 20 newly built townhouses and 20 newly built apartments on the penitentiary complex. Property developer Detlef Maruhn bought the lion's share of the prison compound in late 2006 and resold many of the units to investors.

The building dates from 1879, when it served as a workhouse for beggars, the homeless and prostitutes. Later, the Rummelsburg prison was taken over by the Nazis, who continued to use it as a jail and labor camp for members of society deemed "antisocial." After World War II, the East German Communist regime operated it as a detention facility and prison for 1,500 male inmates.

"The project was unusual—at first no one believed it would be possible," Mr. Maruhn said.

Developers changed the interior "radically" to create modern apartments, Mr. Maruhn said. Most of the investors who bought units rent them to "young, socially mixed" residents, he added.

The former prison laundry is a kindergarten now, and one of the buildings, in which Communist bigwigs Erich Honecker and Erich Mielke were imprisoned after the fall of the Berlin Wall, is now a hotel. "We didn't put the history [of the prison] in the foreground—we didn't hush it up, but we didn't want to create any unpleasant feelings," Mr. Maruhn said.

The prison complex was rebranded as the BerlinCampus, although residents started a group to keep the history of the penitentiary alive, hosting discussions and events with former inmates.

"The idea that people were locked up and lived here involuntarily—that bothered me a great deal at the beginning," said Petra Zimmermann, a resident whose study was once a six-man cell and whose kitchen used to be a guards' room. She chose the development for its central location and proximity to the riverside and green spaces.

Penitentiary conversions aren't straightforward projects. With many old prison buildings listed under historical protection order, developers have little leeway to add features like balconies and elevators.

However, prison conversions often are eligible for public funding and tax incentives, as the government is eager to promote the re-use of historical buildings.

Luckau, home to 9,700 residents, got a new prison in 2005, leaving it with a centrally located plot of land and a building complex dating from 1747. Three-quarters of the development costs came from local or federal subsidy programs. In return, two apartments in the first converted block of 20 had to be rented to low-income tenants.

Tenant Siegmund Borchert said anyone who didn't know his apartment used to be part of a penitentiary wouldn't guess today, except that the windows facing the main street are higher up the wall than usual.

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