SAN DIEGO -- Work officially began Tuesday on a $22.4 million cruise ship terminal at the Broadway Pier along the downtown waterfront that officials said is needed to handle the growing industry in San Diego.

The 52,000-square-foot, two-story steel and metal-framed terminal will be able to handle 2,600 passengers and will include spaces for ticketing and baggage and U.S. Customs & Border Protection.

Construction is scheduled to be completed in December of next year.

Officials from the Port of San Diego, Carnival Cruise Lines, area cities and Mexico gathered adjacent to the construction site at a groundbreaking ceremony to mark the start of work.

According to the port, the local cruise business has outgrown the existing terminal at the B Street Pier, which can handle only two ships at a time.

There were 297 cruise ship calls in San Diego last year.

"Although our industry, as well as the world, is facing some rather difficult economic times, planning for the future cannot be overlooked," Carnival's Carlos Torres de Navarra said.

Carnival, the parent company of Holland America Line, loaned the Port of San Diego $12 million to help pay for the construction of the terminal.

Stephen Cushman, chair of the Board of Port Commissioners, said each cruise ship that stops in San Diego has an economic impact of about $2 million.

"Obviously we have waited for this day for a long, long time," Cushman said. "We could not have done this without our partners, specifically representing Carnival."

San Diego City Councilman Kevin Faulconer said the cruise industry bolsters the local economy through the creation of jobs and tourism.

"The new cruise ship terminal will be a new entry point, I'm told, for nearly 1 million cruise ship passengers," Faulconer said.