HOSPITALITY SUITE Whether at green, mixed-use, or prototypical podium, wrap, and high-rise apartment communities, Archstone-Smith will continue to upgrade its on-site property management teams this year. In January 2007, to the chagrin of Wall Street analysts and investors, the company announced a general manager program under which property managers with traditional multifamily backgrounds will be replaced by veterans from the hospitality industries.
“We are bringing in managers from the Ritz Carlton, the Four Seasons, and the Marriot International Continental hotels, and saying, ‘Look, you have spent 25 years in the hospitality industry, and we are looking to replicate that same level of customer service,’” explains Jack Callison, Archstone-Smith’s president of U.S. operations. According to Callison, the program has been extremely successful in adding innovative best practices to Archstone-Smith’s property management group, although he declines to identify what those best practices are.
Still, Callison maintains that the program isn’t “just rhetoric” and that Archstone-Smith is bringing GMs in the program to customer service summits in Denver, Washington, D.C., and Los Angeles to help distill their experience and observations down to “actionable items” that can be expanded across the company’s operating platform.
If initial results are any indication, Archstone-Smith might have reason to keep the details of their program under wraps: Callison says the company’s first GM has improved NOI at his Studio City, Calif., community by 7 percent, has increased personnel retention to 90 percent, and has pushed customer satisfaction scores at the property into the top 2 percent of Archstone-Smith assets across the country.
INTO THE OPEN? That general manager will likely have his work cut out for him maintaining customer satisfaction scores in relation to Archstone-Smith’s portfolio, if, as planned, the company continues to add to its property roster and grab share in its core markets. Neely, for one, doesn’t expect expansion into new markets by Archstone-Smith in 2008, although he says re-entering Florida is one option under consideration by the executive team.
“Florida is a place where we have done some work in the past, and we’re looking at it right now. We don’t have immediate plans. We’ll watch it,” Neely says. “But we maintain an equal level of scrutiny in all of our markets. We want to continue to be the dominant player in the markets we are in and continue to deeply penetrate those markets.”
Despite the dearth of market moves, don’t expect Archstone-Smith to be entirely quiet in 2008. “We are always divesting and repositioning assets—it’s one of our core capabilities,” Sellers says. “We have been really good sellers; we have been really good buyers. We are always looking for opportunities to turn our portfolio towards what we see coming.”
Just don’t expect any hand-tipping as to what the company sees on its short-term or long-term strategy horizons. While Sellers says he doesn’t expect anything unusual to transpire over the next 12 to 18 months, he again points to Archstone-Smith’s track record, and says the company’s performance will ultimately speak for itself. “The focus is really the same: fabulous assets in great locations in the hardest markets to build in.”
Certainly not an apt description for the company’s headquarters building in Englewood, Colo., but Sellers wryly clarifies that even in that non-descript office property lies one of Archstone-Smith’s surreptitious keys to success and an indication of how the multifamily titan is likely to proceed in the private arena. “We have been in this building for a long time,” Sellers says. “It’s a plain, suburban office building. It’s nothing fancy. We are not in the cool part of town. It’s a simple, easy place, and it is less expensive. We generally do things like that. We try to be understated.”
