Downtown luxury hotel on its way

The long absence of an InterContinental hotel near San Diego’s waterfront is coming to an end, as construction gets under way for the luxury brand’s return to downtown.

Trenching for the $217 million project’s underground garage already has begun, although completion of the 400-room highrise isn’t expected until the fall of 2018.

Located at Broadway and Pacific Highway, the 18-story hotel represents the second phase of a long planned development of 800 hotel rooms on the former Lane Field that decades ago was where the Minor League Padres played ball.

Just last month, the dual-branded, 400-room Marriott SpringHill Suites and Residence Inn hotel opened on the northern portion of Lane Field. Together, the two-phase hotel complex is being branded as BRIC, playing off the names of the intersecting streets at Broadway and Pacific Highway.

While the plan was always to launch construction not long after the official opening of the first phase, nothing was certain until the development team earlier this month closed on its financing, said John C. Portman IV, chief operating officer for Portman Holdings, which has teamed with Lankford & Associates and Hensel Phelps on the project.

Hong Kong-based China Orient Asset Management International provided equity financing, while PNC Bank, N.A. & Regions Bank provided construction loans for the second phase.

The project’s groundbreaking comes at a time when there already are thousands of hotel rooms across the county either recently opened or under construction and thousands more in the pipeline.

“A lot of people announce projects and while everyone is confident they’ll close and start construction, there isn’t a large hit rate where people actually follow through,” Portman said. “My personal view is hotel lending for large and mid-scale hotels is tightening up. So for those under construction or recently opened that will help in terms of supply. Lenders are feeling, right or wrong, the hotel cycle is in the later stages, although we don’t necessarily agree with that.”

The InterContinental Hotels & Resorts, last here in 1987 when Marriott took over what is now the Marriott Marquis San Diego Marina, will include 32,850 square feet of higher end, ground-level restaurants and shops along Broadway and Pacific Highway, as well as a landscaped walkway and plaza along Broadway.

It will also feature a rooftop bar, a 686-space subterranean garage with 271 spaces for the public, and 23,000 square feet of ballrooms and meeting space. Each of the ballrooms will have a full glass wall with views of downtown and the bay.

Because completion of the hotel is more than a couple of years from now, it’s too early to secure specific tenants, but Portman said he anticipates a fine art gallery, upscale apparel and travel accessory stores and possibly a high-end gastro pub in addition to other food and beverage outlets.

He would not disclose expected room rates but said they would likely be up to 25 percent more than the SpringHill Suites and Residence Inn.

Although San Diego’s hotel market is currently strong, it’s hard to know the state of the industry once the InterContinental opens. But that doesn’t worry Portman, given the project’s location near the waterfront and its likely appeal to leisure and business travelers, as well as conventioneers.

“Because these projects take a long time to build, we’re usually not selling in the same market cycle as when we break ground, so that gives everyone a lot of pause,” he said. “But we focus on the right locations in the right cities so we can ride the cycles even if there’s a down cycle.

“When we opened the Hilton San Diego Bayfront in 2008, it was near one of the worst recessions but because of the market and location it did OK.”

lori.weisberg@sduniontribune.com (619) 293-2251 Twitter: @loriweisberg