Lowe has allocated $29.5 million to the project from its recently closed, $52 million Destination Hospitality Development fund, which it opened to investors about a year ago.

Brad Howe, a senior vice president at Los Angeles-based Lowe, tells GlobeSt.com the development is tentatively named the Blackhorse Hotel and will include an equity investment from Lowe as well as the funds from its investors, who include institutions and high net worth individuals.To be designed by Palo Alto, Calif.-based Hill Glazier Architects and built by McCarthy Construction, the hotel is scheduled to be completed in 2004.

"San Diego has remained very strong throughout what was a very difficult year in the hotel business," Howe tells GlobeSt.com. He says the company expects the hotel market will rebound significantly by the time the new hotel opens.