Where were you when Lehman’s collapsed? Eight big property players recall their reactions
At every interview I conducted over 2009 and 2010 for my new book Planet Property, the same question was asked: What can you recall of the events surrounding the collapse of Lehman Brothers on 15 September 2008? It was like asking, What you were doing on 9/11? Here is the opening paragraph of the relevant section of the book, followed by edited extracts.
The point at which the global economy pitched over the cliff was burned as deeply in the mind of interviewees as the pictures of the collapsing World Trade Center towers. The real “Holy shit, we’re doomed” period began with the fall of Lehman Brothers in September 2008, ending when the market finally touched bottom in June 2009. During those nine scary months, values fell a further 26% on top of the 24% fall between July 2007 and September 2008. That’s a monthly average decline of 2.9% – the fastest and steepest collapse in living memory, and almost double the monthly fall of 1.7% over the preceding 15 months.
Gerald Ronson, chief executive, Heron International: At that point, I was thinking to myself: We don’t want more than£5m and a maximum of £10m with any one bank. Then, of course, you’ve got the people who owed the banks hundreds of millions of pounds. Some of them thought that that was the bank’s problem, not theirs. I spoke to some of them, saying, “You don’t seem to be particularly worried.” To this, their answer was: “Let the f***ing bank worry.”
Ian Coull, former chief executive of SEGRO: The week of 15 September 2008 was the most extraordinary week of my life. I happened to be in New York at a property conference organised by Merrill Lynch. Merrill was taken over by Bank of America; the financial world felt it was in meltdown. The mood was one of total amazement at the speed of events. I came down for breakfast, saw an American real estate guy I knew and said: “Have you seen the FT this morning?” He said: “No, I’m not interested in that. It’s yesterday’s news.”
Mike Strong, EMEA chairman, CBRE: By the time of the Lehman Brothers collapse, we had implemented plans to take the cost of the business right down. We took out huge amounts of discretionary spending.
Unfortunately, this is a business where the biggest cost is people; regrettably, a lot had to go. Between 2008 and 2009, CB Richard Ellis reduced operating costs in the EMEA region by $230m. That’s a total reduction of some 35% to 38%. You name it, it was cut.
Nick Thomlinson, former senior partner, Knight Frank:
I went on my wedding anniversary break to St Tropez in September. We were in a hotel, totally oblivious to what was going on in the world – until I saw a paper on the breakfast table, probably the International Herald Tribune, with a headline saying: “Lehman’s collapses”. Everywhere, the world just stopped. September, October, November, December: no one did anything.So we moved very quickly to cut costs: in the end we cut just under 20%. Yes, it was mainly people, sadly, but it was also a frightening amount of waste that had crept in.
Sir George Iacobescu, chief executive, Canary Wharf Group: There were times when it was eerie; times you didn’t know what the next day would bring. But we were sitting on about £1bn of cash, money accumulated over the previous three to four years. Our idea was that it was going to be money for future development – but also money to protect us from accidents.
And Lehman was an accident. You cannot take three or four accidents like that; one accident was enough. Luckily, we had insurance, but two more accidents like that could have been lethal.
• Peter’s book, Planet Property, is published by Troubador. Click here to purchase it.
See also:
• The Lehman’s Collapse: Five years on
• The day Wall Street collapsed: Views from New York and London
