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The harborside quarter of St. Pauli is perhaps the city’s best-known neighborhood, its web of narrow streets branching off the bright neon vein of the Reeperbahn. Named after the rope makers that once worked here, the long street runs the length St Pauli’s extensive red-light district—one of the largest in Europe. The broad sidewalks here are lined with strip joints, sex shops, and bars. In the early 1960s, the Beatles famously cut their teeth in clubs just off the street, playing 12-hour-long gigs in front of drunken revelers. These days St. Pauli's all-night bars, nightclubs, and pubs continue to be a big draw. Despite the seediness of its sex industry, however, the area has undergone some serious gentrification over the years, and those dive bars and flophouses now rub shoulders with trendy eateries and design hotels.

The neighboring Schanzenviertel has also experienced a significant makeover in the last decade. Once filled with artists, punks, and students, and infused with an antiestablishment culture, the "Schanze" remains a neighborhood whose most recognizable building is the Rote Flora, an old theater occupied by squatters who use it for concerts and cultural events. Now, however, it's also a place where cool young Hamburgers go to browse through clothes boutiques and then drink and dine in laid-back, reasonably priced bars and restaurants. Germany’s answer to Jamie Oliver, Tim Mälzer has a hugely popular café and restaurant here, and global labels such as Adidas and American Apparel have also set up shop in recent years. Ten minutes from the center of town by S-bahn, Schanzenviertel has elegant old apartment buildings that have found favor with Hamburg’s media and finance professionals. This has driven the rents up, and forced out many of the same tenants who once imbued the Schanzenviertel with its original edginess.