Ambitious plans for a $20 million expansion of the Maine Mall that included a movie theater, restaurants and a second food court have been dropped abruptly by owner General Growth Properties.

Officials at the Chicago-based company said Tuesday that none of the 134,000-square-foot addition the South Portland Planning Board approved in October 2007 will be built.

Jim Graham, director of public affairs at General Growth Properties, said mall officials instead will focus on upgrading existing stores and bringing tenants to existing properties, including an undeveloped parcel of land across from the mall.

“We have a lot of improvements and new stores and entertainment offerings well under way at the Maine Mall,” Graham said. “We continue to work on plans for the redevelopment of the five acres across Maine Mall Road.”

City Manager Jim Gailey said Tuesday that he was not entirely surprised by the announcement, because mall officials indicated last week they had had trouble securing Regal Entertainment Group, a major tenant, for the expansion.

“Obviously, we are very disappointed that the development is not moving forward. We thought it was good redevelopment of the Maine Mall,” Gailey said. “Retail activity still seems strong in the Maine Mall area, with few vacancies.”

The decision to drop the expansion plans follows recent media reports that General Growth Properties – the nation’s second-largest mall owner – was halting or delaying redevelopment at U.S. shopping centers to focus on international growth. The reason cited was slowing U.S. retail growth.

The Real Estate Journal – an online publication of the Wall Street Journal – reported in February that General Growth Properties had put the brakes on some U.S. mall projects.

The company dropped plans for a Milwaukee-area regional shopping center. It also delayed construction on an open-air mall in Detroit.

The article also noted that a drop in consumer spending is prompting some popular retailers, including Starbucks and Ann Taylor, to delay new store openings and close some existing shops.

But Graham said Tuesday that General Growth Properties “preferred not to go into the various factors that play into its decision” to withdraw the South Portland project.

“Many things beyond the national economic scene played into the decision,” he said.

The Maine Mall expansion had been scheduled to break ground in January, after the holiday shopping rush. There were some early indications, however, that the mall was having trouble recruiting tenants.

Regal Entertainment Group’s much-publicized interest in moving into the proposed movie complex appeared to wane after rival Zyacorp Entertainment rushed to open an eight-screen theater in February, in the Clark’s Pond shopping plaza, near the mall.

On Tuesday, officials from General Growth Properties said that Regal Entertainment Group opted not to sign a lease at the proposed 14-screen theater, which was to be the centerpiece of the revamped mall.

“Regal Theater and the Maine Mall have jointly decided not to move forward with the theater that had been proposed for the land previously occupied by Filene’s,” Graham said in an e-mailed statement.

“As time went by, a combination of many factors and the shifting market landscape made the plan less attractive to both parties,” his statement said.

Regal officials did not return calls for comment.

Gailey said that the development of the Cinemagic Grand in South Portland, as well as movie theaters in nearby communities, saturated the market.

The mall expansion had called for a 60,000-square-foot movie theater with 3,200 seats; an adjoining restaurant; a second, larger food court; and two more restaurants in the parking lot, off Gorham Road.

Graham said the construction of new restaurants had hinged on traffic from the new movie theater.

“The proposed restaurants tied to the Regal theater for the obvious reason that theater goers dine out at restaurants,” Graham said.

The proposed expansion represented the largest addition to the 1970s-era mall in many years. The project would have updated the look of the single-story shopping center, at a time of increased retail development and competition in southern Maine.

“Clearly, the mall is an important part of the economy of South Portland and its tax base,” city Planning Director Tex Haeuser said Tuesday. “One hopes with a facility like this, it will continue to invest in itself and stay current.”

In addition, a major part of the mall expansion project involved improving the water quality in the Long Creek watershed.

During the expansion, General Growth Properties planned to update the shopping center’s underground storm water system to control discharge of sediment, grease and other pollutants into the watershed, which flows into Casco Bay.

Mall officials on Tuesday expressed some uncertainty about when the storm water project would be done, now that the expansion is not moving forward.

Graham said General Growth Properties will “revisit the issue” when it has a clearer idea what it plans to do with the vacant Filene’s Department Store.

The original plan was to demolish the department store, and develop the movie complex in its place. The underground storm water work was to be done when the parking lot was torn up.

Graham said it is possible that a restaurant could use that space or another retailer. He said it is unclear if the Filene’s Department Store, which closed in 2006, would eventually be razed or renovated.

“We are already talking to other retail and entertainment companies about that space, and our options include reusing the existing building or replacing it entirely,” Graham said.

The vacancy should not affect the mall’s property value, as long as it is a “temporary situation,” said Elizabeth, Sawyer, city tax assessor.

The Maine Mall is valued at $260 million, according to city tax records. General Growth Properties paid $3.6 million in property taxes in 2007.

“If they were not able to fill that space and this became a trend, then it could affect the property,” she said.

Sawyer said she remains confident that the Maine Mall will be able to keep its stores and restaurants occupied.

“I suspect they will not have any trouble finding another viable use for that space,” Sawyer said, referring to Filene’s Department Store.

A national clothing chain called Forever 21 recently signed a lease to occupy a second Filene’s store at the mall, which had sold home furnishings and menswear.

Sawyer says the Maine Mall is still the top choice for national retailers that seek to open a store in southern Maine – even as retail corridors near the shopping center are developed.

“The retailers want to be where the other stores are. Coach is not going to locate next to Cabela’s,” which is opening in May in a new Scarborough shopping plaza, Sawyer said.

“They want to be at the mall, near Chico’s and Pottery Barn,” she noted. “I would not play a funeral dirge yet for the Maine Mall. The mall has had a vacancy rate of less than 5 percent for many years and sustained very strong sales.”

Ironically, General Growth Properties announced it was dropping the expansion plans on the same day that the Westbrook Planning Board was scheduled to hold its first workshop and public hearing on a rival shopping mall proposed for a site off of Interstate 95.

The proposed Stroudwater Place would be a 1.7-million-square-foot complex with department stores, a movie theater, restaurants and sports/entertainment facilities. The Maine Mall is 1.2-million square feet.

Although Maine Mall officials are not commenting on the Westbrook proposal, another major mall would end the South Portland retail center’s dominance in the region.

In 2007, John Geddis, Maine Mall’s general manager, talked about the Maine Mall’s position as the primary retail hub in the state, noting that “… the Maine Mall is the only super retail center in Maine, and national retailers know that. They want to move here.”

The Maine Mall historically has not had trouble keeping stores filled and attracting shoppers from across Maine and New Hampshire. But recent retail growth from Biddeford to Scarborough has siphoned away customers and perhaps some tenants, as well.

For example, Texas Roadhouse just opened a huge chain restaurant in Scarborough in the new Lowe’s shopping plaza. The restaurant is filled nightly, with the parking lot overflowing with vehicles.

In addition, a national downturn in the economy is affecting how much Americans spend and how often they shop.

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