View from New York: Emily Wright, Estates Gazette features editor
Just over five years ago this week I climbed out of a yellow New York cab on to Wall Street at the exact moment the US economy plunged into meltdown.
It was September 2008 and the £380bn bailout package had been voted down. Wall Street’s benchmark index saw its biggest daily fall ever, down 770 points.
As the crowds and TV crews gathered round the New York Stock Exchange building listening out for the bell to signal the end of the trading day, I sneaked off into a back street to see if I could find an investor or two having a cheeky cigarette.
Sure enough – there they were in their hoards. Huddles of pink shirts and slicked-back hair just visible in the haze of the Marlboro Red smoke. Getting anyone to talk was a challenge. And who could blame them? Most of them were living through the worst day of their careers.
I eventually found one chap willing to talk. But at the time, against the cacophony of the TV crews and crowds on the other side of the buildings and the sight of the chain smokers by the back door fire exits, it felt pretty dramatic: “We’ve lost a lot of money today. Millions. You won’t find many people to talk to. Everyone is hiding under their desks right now.”
He helpfully added: “Don’t bother trying to get a hard drink anywhere within a mile radius of here tonight. You won’t find a seat.”
Back on Wall Street proper and by now the press was snaking up the length of the street as the first suited victim emerged from the NYSE. After finding himself surrounded by cameras, microphones and journalists, he was hailed with a deluge of questions: “Who do you work for?” “How much have you lost?” “What happens now?”
I don’t recall all of the answers but I do remember his answer to my question, “What will you be doing tonight?” “Going home to hug my labradoodle.” The best thing about it was that it was probably true.
Post-4pm and it was all a bit of an anticlimax. Anyone coming out of the front of the building said the same thing or nothing at all and most had already made their escapes out the back. It was time to leave but not before one last bizarre twist.
I was nearly knocked over by a man who resembled a cartoon character with ADHD. He was racing back and forth brandishing a sign on a torn-up cereal box with the words: “Will bank for food” scrawled on it. He thrust the sign in my face maintaining eye contact as he screamed: “Sell, sell, sell!” into an imaginary phone, before darting off into the crowds.
What a day to be on Wall Street.
View from London: Liz Peace, chief executive of the British Property Federation
I learned quickly when I joined the property industry that this was a sector that was used to boom and bust. So when this downturn started I assumed it would be like the rest – a few years of discomfort, a few notable departures, then recovery and business as usual. It is difficult to recall when the horrible realisation dawned that this latest bust was different. When did it start? The day that Lehman Brothers collapsed? Or had we in fact all begun to realise some time before that that we were going to be in for a particularly rough time?
Certainly, in September 2007 I remember being at the EPRA conference in Athens as pictures started circulating in the day’s press of queues forming outside branches of Northern Rock. Our European and US colleagues were incredulous that this could be happening in the UK. Was this the real wake-up call?
Property values had actually started falling in June 2007, heralding the beginning of what became the largest fall on record, more extreme even than in the Great Depression. By September 2008, they had already dropped by 21% and groups around the industry were seeking desperate and unrealistic solutions from the valuers – freezing valuations was the most talked about. And after Lehman, they by fell a further 26%.
But I am not so sure it was the Lehman collapse that brought home to us what was going on. What did it for me was the news a month later that two of our own major banks had come so close – a matter of hours if we are to believe the subsequent accounts – to disaster.
As I prepared my BPF budget for 2009 I genuinely began to worry that we might not have a credible business for the future. After all, who was going to pay to remain a member of the industry’s advocacy body – essential, in my view, but perhaps seen as an option for those that were supposedly crashing and burning around us.
Ironically, in the end our income in 2009 was only 6% less than the previous year – a reflection, I like to think, of the importance of a representative body when times are tough. But I suspect that the industry survived because property did not disappear, it still needed to be managed, most of it was occupied and some of it was even traded by those canny operators who had not mortgaged themselves up to the hilt.
The recently formed REITs all survived pretty much intact – with one notable exception – and the sage old hands all pointed, just a bit smugly, to how experience was enabling them to deal with a crisis that sorted the men from the boys.
See also:
• The Lehman’s Collapse: Five years on
