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We propose a novel adaptive equalization (AEQ) algorithm for short-reach coherent optical interconnects targeting intra-datacenter applications. The algorithm consists of 1-tap 2 x 2 complex-valued multiple-input multiple-output (MIMO) finite impulse response (FIR) filter for polarization division de-multiplexing, four N-tap real-valued FIR filters for digital equalization, and a post three-tap T-spaced 4 x 4 real-valued MIMO FIR filter for the timing skew mitigation. Up to 8-km standard single-mode fiber (SSMF) transmission experiments with 28-Gbaud PDM-16QAM signals verifies that less than the 1-dB receiver sensitivity penalty can be tolerated in comparison with conventional 4 x 4 MIMO AEQ, while the number of multipliers can be reduced by ~59% if both algorithms use 25 taps. The tolerance of timing skew and chromatic dispersion for the AEQ algorithm is numerically investigated.