Boxed in, breaking out
GdaNsk - Leszek Pankiewicz was in a tight spot a year ago. His software operation in Gdansk figured prominently in the development plans of his new bosses at Denmark-based Olicom.
And he was under orders to expand. The problem was that his existing space in a 1970s, metal-and-glass-framed block building wouldn't do. He needed to find new hi-tech, quality office space. But after a month's search he reported that the Tri-city area had nothing to fit his needs.
"Any move on my side was seen as delayed," said the former college-professor-turned-chief of Olicom Poland. "They wanted to do it immediately."
Pankiewicz realized he'd have to build the space himself. But he knew that his parent company didn't want its cash-flow or future development plans tied up in a property investment. So Pankiewicz would have to bring a long-term investor into the deal.
The first step to solving the riddle came from an employee, who referred Pankiewicz to local developer Allcon Investment. Allcon bought into the project late last fall, after financing and building plans were worked out.
The scheme - spawned by necessity, nourished by word of mouth and now with a second building under construction for software firm Young Digital Poland - will bring almost $8 million in property and equipment investment.
Some may call the developer development a fluke. But Gdansk Mayor Tomasz Posadzki has heralded the potential for a hi-tech park at the site located near Gdansk Trojmiasto Airport as one of the "most important" investment areas in the city.
In August, workers will begin laying carpeting in Olicom's new 3,000 square-meter building whose hi-tech communication system will include ISDN lines, a frame relay system and satellite links. Pankiewicz said he is set to move into his new digs in November. "It was a very, very fast process," Pankiewicz said.
The need to move fast, and systematically, is a lesson Pankiewicz learned early on. His 120-person team produces sophisticated computer network devices called routers and bridges. The Gdansk operation began in the early 1990s when Pankiewicz signed on to a five-person team to undertake a pilot software project for Massachusetts-based Crosscom.
When Crosscom owner Ted Witkowicz saw that Poles made the system management software for Crosscom bridges faster and cheaper, he set up a Polish subsidiary the following year, Pankiewicz said.
And the fight was on, he added. "We wanted to make as much as possible in Poland," Pankiewicz said. He believes the costs associated with maintaining a strong U.S. operation were partly responsible for Crosscom's takeover by Olicom. The other reason was market forces. Crosscom, he said, had to introduce new networking devices in 1993 that didn't have all the bugs worked out. After two years, Crosscom started looking for buyers.
Last year, Olicom formally took over Crosscom in a $90 million buyout and inherited the Gdansk operation. Until last year, Olicom only produced software network devices such as PC cards and modems. In the buyout, the multinational software firm gained more sophisticated technology and a broader client base, and immediately set out building its Polish operation in a 10-year, $55 million development plan, Pankiewicz said.
In the software business, attracting educated, talented staff is key to building and developing those new products, Pankiewicz said. Olicom wants to increase its staff to 150 people, he said.
Currently, Olicom recruits 90% of its employees from local universities, mainly Gdansk Polytechnic. Its entry level gross salary of $800 a month and cutting-edge technology are good recruitment incentives, he said. But to continue to attract and house new staff, Olicom knew it had to move from its current office near Gdansk Polytechnic to a new site.
"The first decision of Olicom was to build this building to attract new people," Pankiewicz said.
Soon after Olicom took over U.S.-based Crosscom last June, Pankiewicz faced two options: renovate existing space or develop a greenfield site.
Construction firms promised to deliver a renovated site in less than a year. "But we didn't want to wait for promises because our market is so fast," Pankiewicz said. Allcon, on the other hand, was a perfect fit, he said. "It's a real cooperation," he said.
Pankiewicz met with Allcon in August last year. The investment group had a site on ulica Dembowskiego in downtown Gdansk, but it didn't meet Olicom's parking needs, said Sergiusz Gniadecki, president of Allcon Investment.
Allcon agreed to start looking for another site, a three-month process that involved looking at more than 30 locations, Gniadecki said. In December, he added, "We knew the type of building, signed the lease agreement and the next day we bought the property."
The agreement paved the way for project financing. Under the 10-year lease agreement, Olicom has agreed to pay $7 million-$8 million, according to Olicom. Although that's almost double the building cost, the lease arrangement gives Olicom the flexibility to move out if development either falls short or exceeds expectations, Pankiewicz said.
The lease agreement is secured by a bank guarantee from Denmark-based Unibank. With this backing, Bank Pekao agreed to a credit line that will finance an overwhelming majority of the project's $4.3 million price tag and construction began in April, Gniadecki said. Return on investment is nine years, he said.
Allcon's sister company, construction firm Allcon Przedsiebiorstwo Budowlane also based in Gdynia, has the contract to build the Olicom site and the new headquarters next door for Young Digital Poland, a multi-media software firm.
Construction is on schedule for the November completion of Olicom's three-story building and occupation of Young Digital's 2,000 square-meter building is slated for March.
But Allcom isn't stopping there. Gniadecki said he's looking to purchase more land in the area near the airport. But much depends on attitudes of city officials and owners of the neighboring agricultural property.
"Finishing this project, we will be in a very good position to talk to the city," Gniadecki said. "We put the blood into that region."
And he was under orders to expand. The problem was that his existing space in a 1970s, metal-and-glass-framed block building wouldn't do. He needed to find new hi-tech, quality office space. But after a month's search he reported that the Tri-city area had nothing to fit his needs.
"Any move on my side was seen as delayed," said the former college-professor-turned-chief of Olicom Poland. "They wanted to do it immediately."
Pankiewicz realized he'd have to build the space himself. But he knew that his parent company didn't want its cash-flow or future development plans tied up in a property investment. So Pankiewicz would have to bring a long-term investor into the deal.
The first step to solving the riddle came from an employee, who referred Pankiewicz to local developer Allcon Investment. Allcon bought into the project late last fall, after financing and building plans were worked out.
The scheme - spawned by necessity, nourished by word of mouth and now with a second building under construction for software firm Young Digital Poland - will bring almost $8 million in property and equipment investment.
Some may call the developer development a fluke. But Gdansk Mayor Tomasz Posadzki has heralded the potential for a hi-tech park at the site located near Gdansk Trojmiasto Airport as one of the "most important" investment areas in the city.
In August, workers will begin laying carpeting in Olicom's new 3,000 square-meter building whose hi-tech communication system will include ISDN lines, a frame relay system and satellite links. Pankiewicz said he is set to move into his new digs in November. "It was a very, very fast process," Pankiewicz said.
The need to move fast, and systematically, is a lesson Pankiewicz learned early on. His 120-person team produces sophisticated computer network devices called routers and bridges. The Gdansk operation began in the early 1990s when Pankiewicz signed on to a five-person team to undertake a pilot software project for Massachusetts-based Crosscom.
When Crosscom owner Ted Witkowicz saw that Poles made the system management software for Crosscom bridges faster and cheaper, he set up a Polish subsidiary the following year, Pankiewicz said.
And the fight was on, he added. "We wanted to make as much as possible in Poland," Pankiewicz said. He believes the costs associated with maintaining a strong U.S. operation were partly responsible for Crosscom's takeover by Olicom. The other reason was market forces. Crosscom, he said, had to introduce new networking devices in 1993 that didn't have all the bugs worked out. After two years, Crosscom started looking for buyers.
Last year, Olicom formally took over Crosscom in a $90 million buyout and inherited the Gdansk operation. Until last year, Olicom only produced software network devices such as PC cards and modems. In the buyout, the multinational software firm gained more sophisticated technology and a broader client base, and immediately set out building its Polish operation in a 10-year, $55 million development plan, Pankiewicz said.
In the software business, attracting educated, talented staff is key to building and developing those new products, Pankiewicz said. Olicom wants to increase its staff to 150 people, he said.
Currently, Olicom recruits 90% of its employees from local universities, mainly Gdansk Polytechnic. Its entry level gross salary of $800 a month and cutting-edge technology are good recruitment incentives, he said. But to continue to attract and house new staff, Olicom knew it had to move from its current office near Gdansk Polytechnic to a new site.
"The first decision of Olicom was to build this building to attract new people," Pankiewicz said.
Soon after Olicom took over U.S.-based Crosscom last June, Pankiewicz faced two options: renovate existing space or develop a greenfield site.
Construction firms promised to deliver a renovated site in less than a year. "But we didn't want to wait for promises because our market is so fast," Pankiewicz said. Allcon, on the other hand, was a perfect fit, he said. "It's a real cooperation," he said.
Pankiewicz met with Allcon in August last year. The investment group had a site on ulica Dembowskiego in downtown Gdansk, but it didn't meet Olicom's parking needs, said Sergiusz Gniadecki, president of Allcon Investment.
Allcon agreed to start looking for another site, a three-month process that involved looking at more than 30 locations, Gniadecki said. In December, he added, "We knew the type of building, signed the lease agreement and the next day we bought the property."
The agreement paved the way for project financing. Under the 10-year lease agreement, Olicom has agreed to pay $7 million-$8 million, according to Olicom. Although that's almost double the building cost, the lease arrangement gives Olicom the flexibility to move out if development either falls short or exceeds expectations, Pankiewicz said.
The lease agreement is secured by a bank guarantee from Denmark-based Unibank. With this backing, Bank Pekao agreed to a credit line that will finance an overwhelming majority of the project's $4.3 million price tag and construction began in April, Gniadecki said. Return on investment is nine years, he said.
Allcon's sister company, construction firm Allcon Przedsiebiorstwo Budowlane also based in Gdynia, has the contract to build the Olicom site and the new headquarters next door for Young Digital Poland, a multi-media software firm.
Construction is on schedule for the November completion of Olicom's three-story building and occupation of Young Digital's 2,000 square-meter building is slated for March.
But Allcom isn't stopping there. Gniadecki said he's looking to purchase more land in the area near the airport. But much depends on attitudes of city officials and owners of the neighboring agricultural property.
"Finishing this project, we will be in a very good position to talk to the city," Gniadecki said. "We put the blood into that region."
