London has every reason to be grateful to Paul Reichmann, the builder of Canary Wharf, who has died aged 83, says City AM. He staked everything on the development in 1987 when few believed in it; watched his company, Olympia & York, go bust in 1992; bought back in and "was hammered again in 2008".
As with railway pioneers, his career reminds us that "those who risk their money on mega-projects" often lose out, while "the rest of us inherit a great infrastructure".
At the peak of the 80s boom, Olympia & York was the world's largest commercial real-estate company. Reichmann and his brothers "commanded an awesome reputation for the scale of the financial risks they were prepared to take", says The Daily Telegraph.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
An oft-quoted statistic was that they were worth more than the entire population of New Zealand. Yet Reichmann was "far from the brash property tycoon of popular imagination", says The Guardian.
Deeply religious, with a knack for complex mental calculations, he lived relatively modestly in a house in Toronto with his wife Lea and drove an old Cadillac.
"Interviewers noted his sombre dark suits, his slouching six-foot frame and his soft voice." Anthony Bianco, who produced a book on the family's history, described him as "a capitalist daredevil in the guise of an undertaker".
The fifth of six children, Paul Reichmann was born in Vienna in 1930, but the family fled following the Anschluss in 1938: first to Paris, then to Tangier.Many of their relatives perished in the Nazi death camps.
A keen Talmudic scholar, Paul studied in Israel and Britain, but in 1956 followed his family to Canada where three of his brothers had established a floor and wall tile company, which swiftly became a property company.
The move was well-timed, says The Guardian: Toronto was in the midst of a huge boom, and the Reichmanns "rode the wave". O&Y's flagship 1975 building, First Canadian Place, became the country's tallest building. From there, they moved to New York, investing in the late 1970s, "when the city was on its knees".
The upshot was the World Financial Centre, a portfolio of skyscrapers in the southern tip of Manhattan which O&Y redeveloped as an office hub to serve an expanding Wall Street. This success led Margaret Thatcher to telephone in 1987 and ask for a similar project in London.
Canary Wharf's 'white elephant' years (see below) forced O&Y into bankruptcy in 1992 then the biggest corporate failure ever. It "transformed Reichmann's reputation from a visionary with a sense of timing, to a reckless developer willing to gamble huge amounts of other people's money", says the FT.
But "you have to wipe out the failure and look at what he has left behind", the chairman of Canary Wharf, Sir George Iacobesuc, remarked last week. "He was a genius; maybe he was just too much of a genius."
A case study of entrepreneurship and progress
And the soaring towers of the Canary Wharf complex "helped to break London's long-standing aversion to skyscrapers".
Three major forces drive progress: institutions, people (especially risk-taking entrepreneurs) and chance, says Allister Heath in City AM. The Canary Wharf story "is a case study of how all three... interact".
Reichmann wasn't the first developer to notice its potential: arguably it was banker Michael von Clemm, who was looking for a small industrial space for the Roux Brothers restaurant group, which he chaired.
Ahead of Big Bang, he thought the desolate wasteland he found had potential to host the City's expansion. When the project's first developer, G Ware Travelstead, proved unable to fund it, the Reichmanns stepped in.
When plans for "an ultra modern citadel of finance" in Docklands were made public, "everyone thought we were crazy", Canary Wharf's George Iacobescu told the FT, "apart from Michael Heseltine and Margaret Thatcher".
But ultimately politicians let Reichmann down. Thatcher had promised the Jubilee Line would reach Canary Wharf but it didn't get there till 1999, and the development stayed half empty.
Reichmann undercut rents to fill space. But, in 1992, lenders lost faith and O&Y was forced into bankruptcy.
"Unbowed, the brothers returned to the fray in 1995", as minority partners in a consortium including George Soros, says The Daily Telegraph.The new company, Canary Wharf Group, floated in 1999.
Reichmann hung onto some shares until they were repossessed by a German bank after the 2008 crisis. Critics said he didn't know when to play it safe. But according to Bianco, Reichmann's biggest failing was "he couldn't bear to part with his buildings".
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
High earners underestimate how much they need to retire comfortably
Retired banker who gave wife £80m to avoid inheritance tax won’t face equal split in divorce
