If you have ever been to TXL or SXF, you will understand why Lufthansa couldn't make either a hub.
TXL is old, outdated and extremely small, they don't have the space for planes. They don't even have a lounge past security as each gate is separated with their own security. You walk 7 meters from the curb to the check in counter and then another 7 meters to the gate. (In terminal A anyways) Terminal C is simply a large quonset hut where everyone either walks over the runway to get to their planes or takes a bus. The only public transport to TXL is via bus service.
Both airports are simply not equipped to house planes, especially larger aircraft.
Don't get me started with SXF, it's basically a giant Burger King where everyone sits on the floor cause there is absolutely no room.
The longest long-haul I think TXL offers is TXL > EWR, which is once a day with United. Could be totally wrong here!