Adtech picks downtown over Kaka'ako for new home
By John Duchemin and Glenn Scott
Advertiser Staff Writers
Network test equipment maker Adtech has ended discussions to lease a plot of state-owned land in Kaka'ako for a company headquarters, opting in tough economic times to settle into newly leased space in the First Hawaiian Center downtown.
The decision marks the end of a yearlong campaign to move the growing company and its 360 employees from four buildings in Kaimuki to a single headquarters and puts a crimp in state development plans for the Kaka'ako waterfront area.
Adtech had been negotiating with the Hawai'i Community Development Authority, which controls state lands in Kaka'ako, on a long-term lease for a five-acre lot near the Foreign Trade Zone docks.
Adtech wanted to construct a 200,000-square-foot building there that the state had considered a key element of plans to make Kaka'ako into a technology center.
Adtech officials say those plans now are on hold while the company navigates the economic turbulence that has rocked many of its multinational telecommunications customers, including Cisco, Lucent and Nortel. Many of Adtech's customers are laying off thousands of workers, curtailing expansion plans and reporting lower sales and earnings.
"We were making quite a bit of progress in negotiating terms of the Kaka'ako lease, but the telecommunications market has taken it on the chin, and we are not entirely immune to that," Adtech president Tareq Hoque said. "Adtech is still doing very well, given the situation in market, but we don't want to get ahead of ourselves. We didn't want to move forward on a project we had some doubts about."
The uncertainty has forced Adtech to slow its expansion, which for several years had made it one of the fastest-growing companies in Hawai'i and one of the most significant technology companies here.
Earlier projections of $200 million in revenue are probably "overly optimistic," Hoque said, though he is confident that the company will exceed last year's $150 million in revenue. Employee count should grow "modestly," Hoque said.
Jan Yokota, executive director of the Hawai'i Community Development Authority, said she is disappointed but understands why Adtech wanted to avoid a large investment, given the economic uncertainties in the high-tech industry.
"They have reasons to be cautious about their capital investment," she said. "To build a building like that would take a fairly significant amount of money."
Plans are going forward, she added, for nearby facilities for the University of Hawai'i School of Medicine and biomedical research.
Despite the loss of Adtech, Yokota said the authority will continue with subdivision plans to create private-sector spaces that other businesses might occupy.
Adtech will move 130 engineers to 40,000 square feet in the First Hawaiian tower at 999 Bishop St. The manufacturing and administrative divisions of the company will stay in Kaimuki.
Once seen as a temporary facility while the company negotiated its Kaka'ako lease, the First Hawaiian space could become a long-term Adtech site, Hoque said. Adtech may move other departments there if space becomes available.
