After the Franco-German war of 1870-71, an economic resurgence began in Germany, which swept Potsdam along with it. From 1860 to 1890, the population of Potsdam increased by about one third. The city limits expanded outward along the arterial roads, thus the Potsdam suburbs Berliner, Brandenburg, Teltow, and Nauener Vorstadt were developed. Important scientific institutes such as the Geodetic Institute, the Astrophysical Observatory, the Magnetic Institute, and the Meteorological Institute, settled in the Teltower Vorstadt between 1868 and 1892.
Under the governance of the emperors William I, Frederick III, and William II, Potsdam’s character became determined by the court, military, and administrative institutions. Industry and commerce exerted no significant influence on the city's image.
With the construction of the Schloss Cecilienhof palace (named after the Crown Princess Cecilie) in the Neuen Garten from 1913 to 1916, the palace-building era of the Hohenzollern dynasty came to an end.
It was in the Neuen Palais that Emperor William II signed the Declaration of War in 1914. Potsdam lost its role as the Residenzstadt (royal seat) due to the November 1918 revolution and the emperor’s abdication. However, the city administration continued to designate Potsdam the official Residenzstadt. In this period, social problems began to appear in Potsdam, the housing shortage in particular, which was to be minimized through the construction of new housing developments.
