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THE ECONOMIC FALLOUT 

The firm put more than  billion in cash on its balance sheet, with  billion in
back-up bank lines of credit, if needed. 
The decline in global trade also hurt the U.S. economy as well as economies across
the world. As the financial crisis peaked in Europe and the United States, exports col-

lapsed in nearly every major trading country. The decline in exports shaved more
than  percentage points off GDP growth in the third and fourth quarters of .
Recently, exports have begun to recover, and as of the fall of  they are back near
precrisis levels. 

COMMERCIAL REAL ESTATE: “NOTHING’S MOVING”
Commercial real estate—offices, stores, warehouses—also took a pounding, an indi-
cator both of the sector’s reliance on the lending markets, which were impaired by the
crisis, and of its role as a barometer of business activity. Companies do not need more
space if they go out of business, lay off workers, or decide not to expand. Weak de-
mand, in turn, lowers rents and forces landlords to give their big tenants incentives to
stay put. One example: two huge real estate brokerages with headquarters in New
York City received nine months’ free rent for signing leases in  and . 
In fall , commercial vacancy rates were still sky-high, with  of all office
space unoccupied. And the actual rate is probably much higher because layoffs create
“shadow vacancies”—a couple of desks here, part of a floor there—that tenants must
fill before demand picks back up. In the absence of demand, banks remain unwilling
to lend to all but the safest projects involving the most creditworthy developers that
have precommitted tenants. “Banks are neither financing, nor are they dumping their
bad properties, creating a log jam,” one developer told a National Association of
Realtors survey. “Nothing’s moving.” 
In Nevada, where tourism and construction once fed the labor force, commercial
property took a huge hit. Office vacancies in Las Vegas are now hovering around
, compared with their low of  midway through . Vacancies in retail com-
mercial space in Las Vegas top , compared with historical vacancy rates of  to
. The economic downturn tugged national-brand retailers into bankruptcy, emp-
tying out the anchor retail space in Nevada’s malls and shopping centers. As demand
for vacant property fell, land values in and around Las Vegas plummeted. 
Because lenders were still reluctant, few developers nationally could afford to build
or buy, right into the fall of . Lehman’s bankruptcy meant that Monday Properties
came up short in its efforts to build a  million, -story glass office tower in Ar-
lington, Virginia, across the river from Washington, D.C. Potential tenants wanted to
know if the developer had financing; potential lenders wanted to know if it had ten-
ants. “It’s a bit of a cart-and-horse situation,” said CEO Anthony Westreich, who in
October  took the big risk of starting construction on the building without signed
tenants or permanent financing. The collapse of teetering financial institutions put

commercial real estate developers and commercial landlords in binds when overex-
tended banks suddenly pulled out of commercial construction loans. And when banks