The former village profited largely from its location on the Imperial Highway Reichsstraße 1, today Bundesstraße 1, which follows a trading route that dates back to the Middle Ages.

The old Reichsstraße stretched from the far west of Germany through Aachen and Cologne to Berlin, then continued on eastward to end some two hundred miles northeast of Königsberg in East Prussia.

The southwestern surroundings of Berlin saw considerable change in the second half of the 19th century when luxurious residential areas were developed in the neighboring villages of Lichterfelde and later Dahlem.

Lichterfelde West and East, founded by the entrepreneur Johann von Carstenn were developed as so called Villenkolonien, settlements made up entirely of mansions or villas.

In Steglitz proper a major shopping area developed around the Schloßstraße, catering also to the wealthy villages of Lichterfelde and Dahlem.