6 Questions for Advanced Green Solutions’ Michael Gottlieb

LOS ANGELES - Former commercial real estate journalist, Michael Gottlieb, now managing partner of Advanced Green Solutions, helps introduce sustainable practices throughout his clients’ office portfolio. He talks with GlobeSt.com’s Natalie Dolce about his move into the world of sustainability, about where the “green” industry is going, and about some of the risks and challenges associated with sustainability. “Green will help redefine what it means to be class A,” he says.

GlobeSt.com: I know you recently changed gears from commercial real estate journalism into the world of sustainability…tell me more about what attracted you to that move.

Gottlieb: I saw sustainability emerge in the real estate marketplace, survive the historic downturn of the past few years and gain acceptance by the industry’s best practitioners. That market resilience combined with the increasing regulatory pressures to cut greenhouse gas emissions and operate more efficiently convinced me that sustainability is here to stay. Going forward, the challenge is going to be in the built environment. Even with more than one billion square feet of space certified by the USGBC, the vast majority of real estate was not built with sustainability in mind and owners are challenged to make big investments in their facilities today. But expensive retrofits are not always necessary to make a significant impact on the sustainability of a building. Smart operations can help building owners advance their sustainability objectives for their assets.

That’s where we come in. We provide MilliCare Textile and Carpet Care in Southern California. MilliCare is a dry, deep cleaning system that leaves no residue and provides a number of benefits over traditional cleaning systems in addition to cleaner carpets. This is real green done simply—we extend the life of carpets keeping them out of landfills, substantially cut water and energy use and apply Green Seal certified, 100% non-toxic chemicals in a process that can dramatically improve the indoor air quality of the properties we clean—and we can earn the maximum credit in our category under LEED EBOM. MilliCare’s ability to deliver solid green benefits at very competitive prices, helped inspire the vision behind my company to provide high-quality, low-cost services to add value and sustainability to real estate assets. Eventually we hope to offer a suite of like services, but this is a great place to start.

GlobeSt.com: Can you provide me with any specific examples of what you have done, clients you have worked with, and how what you provide has affected their bottom line?

Gottlieb: We saw a great example with one of our first clients—a professional services firm that works with corporate executives. They had a problem with a large, obvious stain in their main hallway that two other carpet cleaners couldn’t get out and they were ready to replace their carpet. We came in and knocked out the spot easily. Not only did we keep that carpet out of the landfill but we saved our client $10,000.

Another one of our clients had been wary of spending money to go green, so they tried us in one office building and now they are using us to help introduce sustainable practices throughout their office portfolio.

In another situation, we are in the process of restoring a law firm’s carpet that was saturated with chemical residue from past cleaners. As our crew was onsite restoring their carpet, office workers leaving for the day kept commenting on how much more pleasant our process was compared to the heavy chemicals used in the past by their prior service provider.

In each case, we are saving clients’ money and improving the environment, including the working environment. For every client, we can calculate their water, energy and greenhouse gas emissions reductions from using us.

GlobeSt.com: When people are talking about their sustainability, what are the issues you are seeing people most concerned with? Is it really the price tag? What else?

Gottlieb: NOI is the primary driver of sustainability today. Yes, some companies have made a strong commitment to green their operations and incorporated it throughout their corporate culture because it is good for their workforce, good for their brand and good for society. But if you can’t make a solid case for going green financially, the discussion won’t go far. Often when talking to potential clients, green is the last thing we discuss with them. The perception—one that is not entirely unfounded as many companies try to capitalize on green—that going green costs more is pervasive, so people usually are surprised to find out that our service isn’t going to cost more. The other issue is getting a return on investment. There are plenty of studies out there showing the leasing and investment benefits that greening a real estate asset provides, but the skepticism surrounding sustainability’s return on investment is entrenched.

GlobeSt.com: What are some of the risks and challenges with sustainability?

Gottlieb: Green is an ambiguous term. There are many shades of green out there and we see many companies in the marketplace that present themselves as being green by only making modest adjustments in how they operate. When you peel back the layers you find their green story to be rather thin. That is compounded by the barrage of new technologies that emerge every day and promise to improve the sustainability of building, but really have no track record. Meanwhile, green is a moving target as the benchmarks for sustainability change. From regulations that demand greater levels of compliance to evaluation methods, like LEED and Energy Star that continue to raise the bar, it is a challenge for the average real estate practitioner to stay on top of the latest in sustainability and avoid making a costly investment that fails to provide the promised return. Today’s LEED Gold building likely won’t achieve Gold certification five years from now.

GlobeSt.com: Where do you see the “green” industry going? What is the future of sustainability?

Gottlieb: A few years ago I was speaking to a real estate executive who compared the emergence of green to the emergence of air conditioning for the real estate industry. At first, few buildings had air conditioning and top buildings remained in demand whether they offered air conditioning or not. Obviously that is impossible today. Green is at the same place. Today it is seen as a worthy objective that may provide modest benefits. There will come a day when not having committed to sustainability in some way will hasten obsolescence for even the best assets. Green will help redefine what it means to be class A and that will happen first in California, which will soon begin requiring all commercial property owners to report their energy and water efficiency to the state every time a commercial building is sold, refinanced or completes a major lease. When every building is forced to publicly report their sustainability, you will create a means for the marketplace to value green that will be reflected in tenant decisions, underwriting and property values.

GlobeSt.com: How can owners and operators start thinking about and working towards sustainability in an easy way? What are the first steps?

Gottlieb: Know your property. Get an audit by a reputable firm to evaluate how your property is performing today and make sure your current building systems are properly maintained and functioning as expected. Also consider whether existing building infrastructure might conflict with new systems. Owners and operators also need to consider how sustainability can support the long-term objectives of their organization beyond simply being labeled “green.” Once you know where you stand and where you want to be, then you can make smart sustainable investments. In most cases, you will find that just operating a little smarter and picking off the low-hanging fruit in your facility—tenant and worker education, improving your lighting, HVAC and landscaping controls, replacing outdated equipment with more efficient equipment and smart vendor selection—can give you tremendous bang for your buck. At the same time, there are many federal, state and local incentives available that will offset a portion of the cost of green improvements, such as IRS code Section 179D that provides for an immediate tax deduction of up to $1.80 per square foot for buildings that make a 50% reduction in energy use. Ultimately, you have to be willing to be flexible in how you adapt to change in the marketplace, which doesn’t come easy to most people. You don’t have to believe in global warming to see that environmental concerns will transform real estate.