Adtech deal Hawaii's largest information technology firm, Adtech Inc., has backed out of negotiations with the state to lease space for a high-tech office development in Kakaako.
with state falls apart
The company will stay in
Kaimuki and begin leasing
space in First Hawaiian CenterBy Tim Ruel
Star-BulletinThe deal would have given Adtech reduced rent on 5.5 acres of state land for several years, allowing the company to build a massive high-tech center to fuel its expansion. In return, Adtech's growth was to provide jobs for engineering students at the University of Hawaii.
Observers said Adtech discovered the real estate business in Hawaii is different from the high-tech industry. Also, the economic outlook has grown tight for Adtech's England-based parent company, Spirent plc.
"They would have to make a substantial capital investment to do the building," said Jan Yokota, executive director of the Hawaii Community Development Authority, the state agency that oversees development in Kakaako. "It's a risk to put that capital out."
State technology adviser Joe Blanco, who had been close to the state's talks with Adtech early on, was nonchalant when told Adtech had ended the negotiations. "It wouldn't surprise me at all," Blanco said.
Even with reduced ground rent from the state, developing a high-tech center would be expensive and time-consuming, Blanco said.
Meanwhile, Adtech and its 300 employees have been bursting the seams at its current offices, scattered across four buildings in Kaimuki.
At the time the company began talking with the state early last year, Adtech said it was being wooed to leave Hawaii, giving officials reason to help the company stay here and expand. After all, Adtech started in a UH professor's garage in 1967, and still hires most of its engineers from the university.
Company President Tareq Hoque said the rejection of the deal will not cause Adtech to leave Hawaii.
"Our commitment to staying in Hawaii is not diminished at all," Hoque said.
This weekend, the company is moving its engineering division, about 130 employees, into four vacated floors in First Hawaiian Center, taking up 41,000 square feet. Adtech would ultimately prefer to be closer to the UH, Hoque noted. His dream is for a private developer to build a high-tech center for his company and others to move into.
"We're not real estate people in our company," Hoque said. "It was a learning process for us."
The company's decision to reject the Kakaako deal was also prompted by an easing in Adtech's growth, Hoque said. The company, which makes systems to test high-speed broadband networks, is no longer doubling its work force every 18 months as it was before, although Adtech is still hiring people in marketing and engineering.
The company, for now, will keep the rest of its operations in Kaimuki, linking electronically with its new offices downtown with a super-fast fiber-optic line, said Mari Yonesaki, director of operations at Adtech and daughter of the company's founders. First Hawaiian Center, opened in 1996, also offers relatively advanced facilities and communications for the company.
Meanwhile, the HCDA is figuring out what to do with the land in Kakaako, located on the makai side of Ala Moana Boulevard, just Ewa of the Produce Center. Six industrial companies have already vacated the space.
"We are disappointed," Yokota said. "On the other hand, we do support the company."
The only observer apparently happy with the announcement is state Sen. Rod Tam, who has opposed the deal with Adtech from the get-go. "I'm pleased," said Tam, who introduced two resolutions in this year's Legislature to investigate what he calls "a sweet deal." (The measures quickly failed.)
Tam (D-Nuuanu) said he grew concerned when he couldn't get more information from the HCDA about the discussions with Adtech.
"They said they're still working on it and they cannot show me anything. When people take a defensive attitude, it becomes more questionable," Tam said.
Hoque, while noting his displeasure for Tam's efforts, said the opposition was not a factor in Adtech's decision.