Daniel Grollo

By Tina Perinotto

2 September 2010 –
Daniel Grollo is only a few minutes late for our interview. But then that’s to be expected. These days he sandwiches his time between his new home base in New York with his wife Kat and two children, and running Grocon, the huge private development business that has built and developed some of Australia’s biggest towers.

Not to mention roles on the boards of the Green Building Council of Australia and Bluescope Steel and as president of the Property Council of Australia.

On the day of our interview he’s been delayed at Macquarie Bank headquarters in Sydney. No hints can be prised from him on what the deal is about. It may involve one or two “secondary projects”, he says he is contemplating in the United States, while he and Kat continue to live in New York (he’s not sure for how long) or the major projects along Australia’s east coast, or even the consulting work Grocon is doing in the Middle East.

What Grollo is happy to point to though, is that there is imminent “big news” on sustainability in the wings. And yes, it could be the next Pixel, Grocon’s 1000 square metre carbon-neutral, “laboratory” office building in Melbourne that pushes all the boundaries and shows clients what they can aspire to for their new headquarters in five or 10 years’ time.

Grollo has a lot of pressure to keep the surprises coming these days. But happily, it seems, especially in the case of Pixel.

“We think the market moves so quickly that, in five years’ time, Pixel will be outdated and we’ll be onto the next generation. We’ll have to be pushing the boundaries again. That’s what it’s all about.”

For instance, some of the innovative technology of 18 months ago, such as LED lights, is already mainstream.

“People are doing it because it makes common sense and saves them money,” says Grollo.

“But it uses less energy so it uses less carbon. It’s not that hard. You’ve just got to change your mindset in how you think about things and you can achieve astronomical things. And I think that’s the really exciting thing about Pixel for me.

“Can you multiply it out on a building 10, 20, 30 times bigger? Yes. Is there a cost imperative? There is a cost implication, but my argument is that cost implication is only at a point in time, it actually reduces over time. “

Drivers
At the corporate level the drivers are increasing, he says. And it shows in the “hordes of people” coming through to look at Pixel.

“Legislation, public expectation, regulation is moving so quickly that they need to be ahead of the curve.”
Grollo likes to use the example of the AXA building in Melbourne  that Grocon developed. It was contracted to four-star Green Star but his team took it to five stars instead.

“In the period of the gestation, the three-year construction period, the Victorian government came out and made a policy that said they will not move any new occupancy into anything less than a five-star Green Star. So, had we not been innovative, we would’ve been out of date in the construction period.
Around the country, says Grollo, governments are basically saying, “If it’s not five-star Green Star, they’re not moving in.”

And it’s across the board.

“All the PPPs [public private partnerships] across the country are having to get six-star Green Stars. All the private-sector new commercial office buildings are all six-star Green Star.

“It’s not a Grocon thing, it’s across the sector.” Most of the new buildings are six star.
“So we are responding as an industry.”

The excitement about Pixel, he says, is that “it turns back the clock”.

“Theoretically it doesn’t need connection to mains water; theoretically it doesn’t need connection to mains power.”

In fact it creates surplus energy that is put into the grid.

There’s a boom coming
The drivers for change will reach into Australia’s prolific stock of old buildings, the “80 per cent of buildings, B and C class buildings” that have a “massive refurbishment program to undertake”, says Grollo.

Although the Carbon Pollution Reduction Scheme did not get up, he points out that large corporates nevertheless need to report on their carbon footprints.

“For many of them, whether it’s telecommunication companies or banks, they can only look at their property assets and say: ‘How can we make our carbon footprint more efficient?’

“So you tell me, when you put that together, what’s going to happen to the property industry? There’s going to be some significant changes, some significant innovation. I think it’s an exciting time, quite frankly.”

Grollo admits the need to retrofit and go clean and green affects upper-end assets as well, such as Grocon’s Eureka Tower in Melbourne, with its floor-to-ceiling glass facades so typical of modern buildings, and which add significant head load.

Grollo is unfazed and includes this challenge in his horizon.

“There’s a lot you can do with it. It’ll involve retro-fitting. Eureka did the best it could in terms of the technology at the time, but there’s no doubt there’s a retro fit with Eureka, as there is with all buildings.

“And we may have some practical examples to show soon.”

The news is still under wraps, but Grollo hints at the huge potential of renewable energy, demonstrated by Pixel, and at the power of changing the facades, with the addition of screens for instance, to dramatically reduce head loads.

“I think we’ll get smarter about how we deal with building facades in the future,” Grollo says. “It’s not a hard thing to overcome. I think you’re going to see some innovation coming. “

“At its worst, there is huge contingent liability in our old stock. At its best, there’s a massive opportunity to reposition all our old buildings into more sustainable buildings and create a huge amount of value. So it’ll be a question of whether people take it as a negative or a positive. But I think there’s a whole positive story there.”

In the US, he says, the Department of Energy has a program to create a register of the world’s most energy-efficient buildings.

“They’re working off a philosophy that says: ‘If you can save energy, you solve the biggest part of the carbon debate.’ They are very excited about Pixel. So when you get to retro-fitting, the big one, the big bang for your buck is renewable energy.”

Regulation
At what point does Grollo think the voluntary market-led move to greater sustainability and the mandatory disclosure of energy use now in play give way to, say, mandatory minimum performance?

Predictably, he’s not keen on mandatory performance.

“Personally, I’m not sure you need to get to minimum performance. And this is an optimist’s view. If I look at the success of the Green Building Council, we struggled with this question around the Green Building Council: How will we get anyone to go to four-star Green Star? Through the pursuit of excellence and through trying to market themselves and achieve excellence in new buildings, the market went to six-star Green Star.”

But surely new sustainable buildings are only a fraction of overall stock. Do we have time to wait for voluntary transformation, given the scientific projects of global warming?

“Have we got time is a good question. I think we have.

“If we really think we don’t have time – and you won’t like this answer – but if you really wanted to tackle carbon tomorrow, you’d close the coal power stations and replace them with nuclear.”

In Grollo’s opinion, the waste issue in uranium might well be solved by taxing uranium and using the proceeds to fund CSIRO research into the problem.

“We’ve just never invested in the science. So that if Australia was really, truly serious about saying, ‘What can we do to the carbon footprint of the globe?’ you stop coal and you go to uranium.”

In Grollo’s view, this issue points straight to Australia’s greatest potential contribution to climate change action: not so much an effective reduction of carbon but a massive leap in technology and intellectual property.

“Australia can’t effectively change the globe’s carbon footprint because ours is insignificant to the rest of the world’s. But we’re a very smart country. What we can do is tackle these challenges with science, with our education system, the smartest people, and share those ideas with the rest of the world.”

For instance, at Bligh Street the company has come up with a more sustainable concrete mix that critically, also “goes off” faster than its comparable mixes. At Pixel, says Grollo, RMIT has verified a concrete that has 60 per cent less embodied carbon than normal concrete.

“Think about that. That’s a big reduction. If you think about the concrete production around the world, it’s massive.”

In terms of buildings too, Grollo says Australia is leading the world with “a suite of the best.” In particular he nominates the ANZ Bank building at Melbourne Docklands, CH2 in Melbourne, 1 Bligh Street in Sydney and the Energex building.

“There’s all these six-star buildings, just incredible achievements.

“In my mind, Australia’s doing as much as anywhere in the world. But I have no doubt, as you look at countries like the Middle East and China, they are going to quickly learn and push the boundaries on us.”
Politics and leadership – Melbourne has it

Through his work on industry bodies such as the Green Building Council and the Property Council, which he has also been strongly involved in, Grollo senses a huge demand for more efficient planning as a priority. The industry, he says, “wants to get on with the job.”

But the politics of development is “very hard,” and in some quarters it is biting badly.

Anti-development sentiment is burgeoning, and in Sydney in particular the anti-growth, anti-development sentiment is dangerous.

Melbourne stands out among its city peers, says Grollo, because of its leaders.

“I think Melbourne’s a really good place because it’s got some good leaders at a couple of levels. It started with [former premier Jeff] Kennett; I think [previous premier Steve] Bracks was a very good leader.

“And I think that in [the city] council we’ve got some very good leaders, particularly Rob Adams who’s one of the best city planners in Australia, if not the best. And he’s been there for a long time; we’ve benefited from his leadership. We’ve benefited from even the current government, you know, John Brumby’s a good leader. Whether he’s popular is another story, but they are giving the state some good direction. So we’re benefiting from generally good leadership. “

“But that can swing on a dime. You can change that momentum very quickly. So I think that’s Melbourne’s story: all it needs is your people in power to change their style from one of leadership to one of popularism.”

Sydney doesn’t
In Sydney, Bob Carr famously said to shut the gates, that Sydney was full.

Not a good idea in Grollo’s view.

“I think that’s a really dangerous things for politicians to be saying because it’s a lag effect. Because once you begin to send that perception out, you don’t feel the real pain of that for three or four years, but when it hits, it’s very hard to turn back the cycle. And I think New South Wales suffers from that agenda, and Sydney particularly.”

Daniel Grollo: The environmental movement has great traction around the world

But there are swings and roundabouts.
“I do remember in the early ’90s when it was reversed. I do remember when Melbourne was not the place to be … when everyone was coming to Sydney.

“So I’m a believer that actually there’s a lot of opportunity in Sydney, and that at some point Sydney is going to do some wonderful things. There’s a lot of cyclicalness in this. And I think Sydney’s a fabulous city that’ll come back.”

First though, it will need to resolve its global city status. For this you need a “big CBD, you’ve got to encourage density, you’ve got to encourage size – and this is something not supported by the city council, no doubt because this is the popular view, he says.

“The concept that you’re going to be truly an international city and somehow you’re not going to encourage big-city policy, I don’t follow that logic.”

In some ways, he thinks it’s a shame that Frank Sartor, a former Sydney lord mayor and former planning minister, does not have a greater role. Grollo and he “clashed a lot”, but the point was that Sartor was passionate about Sydney.

“He was a leader with a vision, you know, and he was going to make things happen.

“If I think back to the Sydney Olympics and Sydney’s heyday, and when it was a really important city on the world stage, and really going places and leading Australia – that’s the kind of leadership it had. It had very strong, powerful leadership. And you don’t need to necessarily love strong leadership. I understand that not every decision that gets made, you’re going to love. “

Development – it’s not happening
For great cities, though, the corollary of a big CBD and inner centre is that you need to limit urban sprawl, Grollo says.

“I personally believe in big cities. It’s a good thing from a density point of view, from an efficient use of infrastructure, social infrastructure … high density around the transport nodes.”
But while it sounds good, it’s simply not happening Grollo says.

“I know it’s basically policy everywhere, but we don’t have the courage to lead that at a local level. So when you get into councils, they don’t want to have high density around train stations. No one wants it. Everyone understands the rationale for it but no one wants it to happen next door to them. So it is a complex issue.”

On the other hand, he sees the difficulty of new land release is “really biting” the development industry.

Population is not a good debate
On a broad level, Grollo is dismayed by the debate on population growth.

“I don’t like the debate on population. I think it’s very political and it really is short term and simple. The reality is Australia will have a growing population. From a financial perspective we need to have a growing population. I think also it’s extremely naïve.”

You only need to look at where Australia sits in a global perspective to understand the reality.

“I looked recently at a map of the world that depicted where the world’s population is by red dots. And the density of population around the northern rim of Australia … is extremely dense right around us. For us to expect that somehow we’re going to stay as sparse as we are … is naïve. I mean it cannot happen. And quite frankly, at some point, if we want to remain naïve for the next 20 or 30 years, it’ll become a security risk for us. “

Grollo’s grandfather came to Australia from Italy in 1927, at a time when the population of Australia was about 3.5 million people. “Now, he was a migrant, and there was Chinese migration before that as part of the gold rush. How many of us think that we are actually in a position to say, ‘Well, Australia should take no more migrants?’ I reckon by and large we’re all bloody migrants anyhow.

“And who are we to say you can’t have migration? I find it quite disturbing and quite naïve, and quite populist. It disappoints me.”

Grollo is also uncomfortable that, in New York as in other countries he visits, the dominant theme in connection with Australia is “boat people”.

“For that to be our external communication to the world I think is a very unfortunate thing.”

Greenie

What about Grollo’s self-proclaimed “greenie” tag?

“I say that lightly. To me it just makes a lot of sense, and I think it does to most people.

“Every generation should hand over an environment no worse off than they inherited. Now, every generation preceding us has not done that. It’s the right thing to do. I think the whole environmental movement has got such great traction around the world because it breaks down to a principle that simple.

“It’s got a lot of passion with the mums and dads around the world. So I’m not talking about in Australia, but I’m talking about around the world. And so for that reason I think that you will find it’s a popular view, and in this instance I think popularity is a good thing.”

Grollo says you might point to the fires and Moscow’s recent heat wave and the floods in Pakistan, and have a debate about their causes. But regardless of your answer, he says, it’s fairly clear we can’t keep polluting the air and “just keep pumping sewerage into the oceans … creating more and more waste and more and more landfill, and burning fossil fuels forever.

“There is that technical limit to that, and we need to challenge ourselves in different ways.”

For Grollo, and his company it seems, that’s the only limit he’s taking notice of.

The Fifth Estate – sustainable property news

“We can’t wait for the future”