There are different points of view on the political capacity of city governments to steer the process of economic growth in a rescaled statehood. Somme scholars see this tendency as an opportunity to overcome the hollowing out of the national state and to reinforce local government. Others argue that there is increased inter-urban competition, which forces urban governments to apply market-oriented strategies, leading to a reduced steering capacity of urban governments. We analyze the inward oriented politics of Berlin’s housing sector and show that the city is increasingly under pressure to fulfill the wishes of global real estate investors. We then look at the international activities of Stuttgart that is trying to alter its position in a global market establishing alliances with other cities. We show that, within both policy areas, the local state is under the pressure of international economic competition while trying to achieve socially coherent urban development.