WASHINGTON, DC—Over the past year GlobeSt.com has covered retail REIT RPAI's bold and innovative strategic plan to increase long term value through a finite market approach. But an exploration of the intense planning in the ten core target markets that remain underscores the potential growth its executives see for the Oak Brook, IL-based firm and its ability to transform a community through redevelopment.

Currently, approximately 20% of the REIT's annualized base rent is derived from mixed-use and lifestyle assets, and RPAI intends to add even more through the redevelopment of Boulevard at the Capital Center and Towson Circle.  At Boulevard at the Capital Center, the larger of two projects in the Washington, DC/Baltimore corridor, ambitious plans are shaping up that expand the REIT's reach, via partnerships, well beyond retail into multifamily and even hospitality and healthcare. But both projects have two themes in common: community transformation and a focus on experience, and convenience, not just shopping.

The smaller of the two projects, Towson Circle in Towson, MD will transform an existing 118,000-square-foot retail space that, according to EVP, COO and CIO Shane Garrison, “has struggled from a configuration standpoint. But it's still an excellent infill site, and when we look at it as a mixed-use conversion, it's very compelling.”

Garrison provides some hints as to what we'll see in Q3 when RPAI formally unveils the scale and scope of the project: “Through a partnership, we intend to add 300 to 350 residential units. In addition to densifying the asset, we will reconfigure the existing retail into a more street friendly, walkable component with markedly increased access and visibility.” While the net retail square footage will not change meaningfully, the intent is to drive significant rents while also creating a much better overall experience for customers.

But it's in the second area project, this one inside the DC Beltway, where RPAI pulls out all the stops. Boulevard at the Capital Centre, is an aggressive plan that calls for a $650-million regional medical center as a sort of anchor to drive densification. The project includes reconfiguring the retail space, and adding multifamily and other commercial uses including office and hospitality.

“It's an interesting exercise,” says a low-key Garrison, who explains that partnership negotiations for the multifamily component (as many as 1,000 units) and hotel have yet to be finalized, but the hospital facilities will be owned by the University of Maryland Medical Systems and Dimensions Healthcare. “We're extremely excited about the prospect of working on a project of this scale with Prince George's County and the nuances that it will bring to a mixed-use asset.”

It will be a far cry from the existing facility, which Garrison describes as a hybrid lifestyle/power center with a movie theater and such tenants as DSW, hhgregg and Sports Authority. But the retail “has a low FAR,” he says, “and based on demand studies and conversations with Prince George's County we feel the density will increase five or six times by the time we're done.”

There are additional features of the planned complex that go a long way to ensuring its ultimate success. Garrison points to its adjacency to the Redskins Stadium and the fact that it's a transit-oriented development. “We're the last stop on the Silver Line."

“I don't know that I've seen another project like this,” Garrison continues. “Just think about the potential vibrancy and convenience that a 24/7, regional medical center brings to the county in conjunction with the other possible drivers of densification, the residential, the entertainment and the retail, and you get that live, work, play environment that provides for long term growth and a very unique experience”

In terms of clear project time frames, Garrison says they're more “opaque than clear,” but he expects to have some more finite details and announcements by year end, after the hospital CON process, with construction likely starting in 2016.

So how do the two developments figure in the overall RPAI game plan? “Year-to-date, we've completed approximately $380 million in acquisitions, largely in DC, including assets in Gaithersburg, Tysons Corner, Falls Church and Leesburg” he says, “and since our focus is limited to  10 markets , we have deep relationships, and the majority of those deals have been done off market.”

From a hold perspective, Garrison calls such projects evergreen: “You want to hold onto those sites and continue to grow great assets. These are assets we own and understand and we're very comfortable with that risk. From a return-on-cost perspective, redevelopment returns are double digit in contrast to new-acquisition returns, which are easily 400 to 500 basis points below that on a year-one basis. All things considered, these are great risk adjusted capital allocations that will help us drive long-term NAV.

“Retail tenants today are more focused on just this sort of class A, transit-oriented environment,” Garrison continues. “And this is in contrast to the last cycle, where it was more about the volume of new store openings. Today it's less about new keys, if you will, and more about the quality of sales and long-term operations. That's what's driving the retail side. Additionally, there is a fundamental shift in shopping patterns largely driven by technology and generational preferences of Millennials who prefer to spend on experiences over “things”. This generation prefers to be in the action, so to speak, and DC especially, has been prolific in multifamily development. When you think about those together that's a powerful combination…if it's done right.”