It's often the little things that make an apartment complex stand out. From the floor plans to the landscaping, a builder who creates for his own account always puts extra effort into his communities. That certainly is true for Archstone Communities, an Englewood, Colo.-based owner and developer of luxury apartment complexes, headed by R. Scot Sellers, chairman and CEO. It's one of the few national companies that builds projects to own on a long-term basis.

Archstone's success is based on the company's development strategy and its unique ability to bring the resident's perspective to the forefront, says Dana Hamilton, senior vice president in charge of operations at Archstone.

It's the company's innovative yet practical design elements and its acquisition of prime real estate sites in high-barrier-to-entry markets, with a market cap of $6 billion, that caused Multifamily Executive to select Archstone as the 2001 Multifamily Executive Builder of the Year.

R. Scot Sellers, Chairman, CEO Archstone Communities
R. Scot Sellers, Chairman, CEO Archstone Communities

Development Strategy The basic framework for Archstone's development strategy is to build in high-barrier-to-entry markets, explains Matthew Gilman, senior portfolio manager at ABP Investments US Inc., an investor in Archstone. "Right now, they are building in areas where there is not a lot of development going on. And, over time, that creates a lot of value." These areas include Washington, D.C.; Boston and San Francisco.

For instance, in 1995 Archstone was one of the first developers to go back to the California market. However, the company didn't start construction on its first project there until Dec. 1996, says Sellers. "It takes a very long time, from finding the land to getting the zoning in place to getting it all ready to start construction. ... It can take anywhere from two to five years," he explains.

Archstone's California properties now consist of more than 15,200 units in the San Francisco Bay area, Ventura County, Los Angeles, the Inland Empire, Orange County and San Diego.

Since 1995, the company has become one of the state's most active builders. Because of the company's commitment in California, including setting up development teams and offices in Irvine and the San Francisco Bay Area, Archstone is usually able to "get a very early look at any development opportunity that exists and [often] the market doesn't even know it exists," says Sellers.

They have made all the right moves by going to California and selling out of weaker markets, says Gilman. Archstone has been an active seller of older communities that it didn't develop, such as El Paso, Texas; Tucson, Ariz., Jacksonville, Fla.; Columbia, S.C.; and Birmingham, Ala.; particularly complexes in secondary markets. The money from such sales has been moved through tax-deferred exchanges into Archstone's core markets.

"That's what is unique about our investment strategy," says J. Lindsay Freeman, managing director of the company's East Region. "We have demonstrated the ability over a period of years [to] move capital from market to market in order to maximize the growth potential from the assets in which we have money."