Just when the housing market needs a firm hand, Ottawa makes it easier to get a mortgage

 

So much for the adult supervision of our housing market.

The federal government was onto a good thing when it introduced a stress test for home buyers a few years ago that demanded they be able to afford mortgage payments if interest rates spiked higher. The stress test was tough, but all in a good cause, in that it limited the risk of people buying more house than they could properly afford.

Starting April 6, the stress test will get easier for insured mortgages, which typically means the buyer has a down payment of less than 20 per cent. An already hot market in many cities is getting more stimulus through the easier stress test. Prices will rise, affordability will fall and more people will buy homes they can just barely afford. Wait until they add kids, cars and rooms full of furnishings.

The revamped stress test requires that buyers be able to afford payments calculated using the greater of the rate offered by their lender, or a new weekly reference rate based on real market five-year fixed rates for insured mortgages plus a mark-up of two percentage points.

The current stress test is based on posted five-year fixed-rate mortgage rates at the big banks, which are higher than what the banks will offer homebuyers, and now uses a rate of 5.19 per cent. A competitively discounted five-year fixed-rate mortgages today goes for about 2.69 per cent, which means the current stress test is roughly 2.5 percentage points higher than what people are actually paying.

In pure economic terms, that’s an excessively big margin of safety to require from buyers. There is zero risk of rates rising 2.5 points any time soon. With the full impact of the coronavirus, also known as COVID-19, on global economic growth still to be determined, there’s a bigger chance that rates will fall from current levels.

In fact, worries about COVID-19 have helped to cause a drop in the bond market interest rates that guide mortgage rates. Yet, that 5.19-per-cent reference rate for the stress test has held steady.

This resistance to market trends has led to criticism of the current test for being too rigid, and thus causing too many people to rethink their home purchase. The usual choices for these frustrated buyers: Wait and save a bigger down payment, buy a smaller house or find a cheaper neighbourhood.

The toughness of the original stress test did slow the housing market, but it’s feeling much better now. The average resale home price nationally surged 11.2 per cent in January over the same month of 2019. Prices jumped 19.5 per cent in Kitchener-Waterloo, Ont., 8.7 per cent in Toronto, 9.8 per cent in Montreal, 11.1 per cent in Saint John and 7.8 per cent in Halifax.

Vancouver is still recovering from a slump, and markets in Alberta and Saskatchewan are still hurting as a result of low oil prices. But there was an overall sense of renewal in the housing market prior to the announcement that the stress test would be softened.

The housing industry has hammered the stress test for being too harsh and for ruining the home-ownership aspirations of young first-time buyers. Just as this argument was weakening amid strong sales, the federal government has stepped in to make it easier to buy a home.

The revamped stress test is better in some ways than what it replaces – more commonsensical and responsive to what’s actually happening to interest rates in the here and now. But the toughness of the current test is what’s needed as housing mania reawakens in many cities.

Forget the idea that the current stress test requires buyers to afford rates at levels they may not see for a decade or more, if ever. The real value is that it forces buyers to save more or borrow less money. To make more conservative home-buying choices, in other words.

Easing the stress test will add fuel to the market and make it less onerous to qualify for a mortgage. Housing needs a firm hand right now, not a more indulgent approach.

 

From the Globe and Mail

Downtown Kitchener college campus expected to give economy a boost

KITCHENER — Businesses in downtown Kitchener could see an uptick in sales next week as the new Conestoga College campus at Market Square prepares to welcome students.

Over 800 students are enrolled in programs at the campus, with classes set to begin Monday.

Another 100 part- and full-time faculty will also work out of the building.

That means that nearly 1,000 people will become patrons of downtown shops, amenities and restaurants: the college made the decision not to include food services on the campus.

“What we decided really consciously to do was not offer food services internally in our space, what we really want the students to do is utilize the other spaces within Market Square, to visit the shops, restaurants and other amenities that already exist downtown,” explains Associate Vice-President of Student Affairs Trish Weigel-Green.

“So if you think about having 1,000 young people descending really on the downtown core, what we really hope is that they become part of the community and part of that is the economic contribution that they bring.”

Almost all of the 800 students registered for January are international students.

Many are expected to rent homes and apartments near the campus, while others will live further away and use the LRT to get to school.

Construction at the campus is mostly finished, but there are still workers on site putting together furniture, installing technology and putting finishing touches on the space.

The campus will mainly offer business programs, but in the coming months there are also plans to expand to other areas.

Conestoga College has also partnered with Apollo Cinema to host a Bollywood night to give them a taste of some of the social activities the city has to offer.

By Tegan Versolatto – CTV News

Watch the Video

 

Kitchener rents appreciating at one of Canada’s fastest rates

KITCHENER – Lots of demand, few options and sky-high prices: this is the reality for local renters.

Apartments in Kitchener are appreciating at the second-fastest rate in Canada, causing an affordability crunch in the city.

If you want to rent a new condominium downtown, it will likely cost between $1,700 and $2,100 a month. That’s if you can get it before someone else does.

A bunch of my friends who were born and bred in Kitchener were like, ‘You’re ruining the market for us,'” she says.

Her Kitchener rent then is still more than the average rent now. A one-bedroom is now averaging $1,300 a month, according to Pad Mapper, a 15 per cent increase over last year.

That average is city-wide—downtown is different.

“Socio-economics is a thing we don’t talk about enough and people are in really tight positions,” she explains.

There are a lot of them. On Monday night, Kitchener council passed a new bylaw that may provide some renter relief, allowing granny suites and tiny homes.

That bylaw will open up 50,000 properties to densification.

“This is one little piece of the puzzle, it’s not going to solve the affordability in Kitchener,” Coun. Sarah Marsh told CTV on Monday.

Navarro likes the idea, but cautions that it may not slow the spiking rents downtown because it’s still cheaper than Toronto.

“That’s why people are leaving, but we’re driving up prices in other cities because we’ll take it, because automatically it’s cheaper,” she explains.

paying that $1,800 a month, she was able to land a two-bedroom apartment for $1,400 a month, including parking.

She says she’s lucky, because it was still under construction when she signed the lease.

 

By Max Wark – CTV News
Watch the video

PM announces $52M for ‘innovation network’ between Waterloo, Toronto and Ottawa

The federal government is investing $52.4 million in an innovation network that is expected to create 18,000 skilled jobs in Waterloo, Toronto and Ottawa.

Prime Minister Justin Trudeau announced the funding for the new “Scale-up Platform” program for tech companies at the Communitech technology hub in Kitchener, Ont., on Tuesday.

The federal government says the platform will be the first of its kind in Canada, and it will incorporate the skills of Ontario’s “top innovation hubs”: Communitech, in Kitchener, the MaRS Discovery District in Toronto and Invest Ottawa.

The three will work with tech companies to grow their businesses.

The government said it expects the platform will help 30 Ontario companies, create 18,000 skilled jobs “and achieve revenues of $100 million or more by 2024.”

“For the first time in decades, we have a crop of scale-ready firms that are on the path to $100 million. Our job — through the Scale-up Platform — is to help those high-growth firms find the talent and capital to accelerate their growth,” said Iain Klugman, President and CEO of Communitech.

“We need to pool our expertise, our networks, and our resources to help them compete globally and create good-paying jobs for Canadians.”

This is one of many stops made by the prime minister this winter and spring, talking about jobs and the economy as his party prepares to launch its campaign for the federal election coming up in October.

Read Full Article

Jackie Sharkey · CBC News 

Mass migration helping bolster region’s home prices

A new trend is emerging in the local real estate market that appears to be backed by mass migration.

Last month’s real estate numbers show that the number of sales is falling, but prices aren’t.

When homes go on the market, there’s increased competition. A lot of that competition is coming from the 416 area code.
A Western University economist crunched the data looking at people living the Greater Toronto Area, and it turns out that Waterloo Region is the fourth most popular destination in Canada: while only 3,900 people moved from here to Toronto, almost 8,000 did the opposite.

“You do get a lot more space for less here, but I do notice the prices are coming up a little bit,” says Adrianna Djkowski. She moved from Toronto to Kitchener spontaneously to land a job at a local tech firm.

Here, she says, buying a property is a possibility, an idea that seemed too far out of reach for her in Toronto.

Brian Santos, president of the KW Association of Realtors, says the prices have remained high because inventory is so low.

“If there’s a real good house out there, chances are there’s going to be multiple offers on it,” he says.

Another reason for the net migration of over 4,000 people from the big smoke is child care costs, which, paired with the high cost of living in Toronto, can price people out of the market there.

View on CTV News’ site

 

CTV Kitchener
Published Thursday, April 4, 2019 6:25PM EDT
Last Updated Thursday, April 4, 2019 11:05PM EDT

Construction is Underway

The base is taking shape at DTK Condos in Downtown Kitchener. We are excited to see the stages in construction as we move along. Excavation and shoring is almost complete. At this point the foundation is also beginning to be poured on site.

The photos here show the construction completed to this point. Watch our blog or register for more updates as we build Duke Town Kitchener.

Too few houses for sale in Waterloo region spark bidding wars, says realtors group

Realtors association group says multiple offers on properties are increasing prices

Bidding wars are breaking out because the number of homes going on the market in Waterloo region is at “historic low levels,” local realtors say.

Housing prices continue to rise even though the number of sales has slowed, said Kitchener-Waterloo Association of Realtors president Tony Schmidt.

“We continue to see multiple offers on properties putting upward pressure on prices,” he said in a news release with January’s sale numbers.

In terms of sales, if you don’t count the past two years where the market was hot, Schmidt said it was “a very typical January.”

The follow are sales figures compared to those in January 2017:

  • 149 detached homes were sold last month, down from 194.
  • 70 condo units, down from 79.
  • 27 semi-detached homes, down from 32.
  • 22 freehold townhouses, up from 20.

The average sale price of all residential properties in January rose nine per cent to $458,750, compared to January 2017, when the average sale price was $421,104.

Schmidt noted tougher mortgage rules came into play on Jan. 1 this year, which has “sidelined some homebuyers.”

But the rise in prices is largely due to so few homes going up for sale.

“The reality is we’re still experiencing more demand than supply right now,” Schmidt said.

Original Article

Manulife plans 25-storey building in downtown Kitchener parking lot

Manulife Financial has big plans for what’s now a parking lot at the corner of Charles Street and Water Street in downtown Kitchener.

The City of Kitchener has received Manulife’s site plan application for a 25-storey building, which details a ground-floor retail space, five storeys of offices and topping off with 20 storeys of residential space, along with parking.

Beverley MacLean, the director of external communications with Manulife said in a statement, the company is evaluating the potential to redevelop part of the parking lot at 85 Charles.

“We have also begun to gauge interest in the proposed project with potential office and retail tenants to determine feasibility of the project,” stated MacLean.

“At this time, no decisions have been made with respect to redevelopment of the property. Manulife is committed to Kitchener and Waterloo, the home of our Canadian headquarters.”

‘Positive energy’

Janine Oosterveld, the manager of site development with the City of Kitchener, told CBC News there is a good mix of proposals for mid-rise to high-rise buildings scheduled to be built downtown.

“There’s a positive energy in downtown Kitchener both from an economic development perspective, in terms of…high-tech businesses locating downtown,” said Oosterveld.

“We also have a downtown exemption to our development charges that’s going to be expiring in 2019. There is an interest in getting development applications through the door so they can get their approvals done ahead of time.”

The site plan is one of at number of projects the city is reviewing in the downtown core and area. Other projects going through a site plan application include:

  • 345 King St. W. for a six-storey office building
  • 114 Victoria St. S. for an office and residential property
  • 24 Gaukel St. which includes 31-storey residential building with ground floor commercial
  • 54 Water St. which is Manulife’s project that includes Francis and Charles
  • 1 Queen St N. 3 storey addition to the existing building (residential units with ground floor commercial)
  • 334 King St. W. 2 storey building with ground floor retail and upper floor office
  • 51 David St. 6 storey residential building
  • 112 Benton St. 15 storey residential building. That is a second building for Arrow Lofts which is has received final approval.
  • 399 Queen St. S. Barra on Queen is a 6 storey residential building
  • 607 King St. W. Sixo (which is a zoning amendment / official plan amendment – no site plan yet
  • 20 Breithaupt St. (which is also a zoning amendment / official plan amendment – no site plan yet
  • 64 Margaret Ave. – (3 and 6 storey residential buildings)

Original Article

Startup city: The high-tech fever reshaping Kitchener-Waterloo

Burgeoning tech companies are on the rise in Canada, attracting funding and IPO buzz in hubs across the country. Our occasional series explores how each locale nurtures its entrepreneurs, the challenges they face and the rising stars we’re watching.

Waterloo’s next wave

AS BLACKBERRY FADES TO A SHADOW OF ITS FORMER SELF, A NEW GENERATION OF ENTREPRENEURS IS RISING OUT OF THE WATERLOO REGION. AT ITS CENTRE IS AN INDISPENSABLE INSTITUTION, TALENTED INVENTORS AND A DEDICATED GROUP OF COMMUNITY LEADERS CO-OPERATING TO SUPPORT THE HUB’S AMBITION TO BECOME A WORLD-CLASS TECHNOLOGY CENTRE

On a sticky August Saturday in 2008, Steven Woods got a call on his cellphone. The Saskatchewan-native had just moved from Silicon Valley to Waterloo, Ont., to serve as Google Inc.’s site director for an outpost of engineering excellence in the mid-sized Canadian city. He was surprised to get a call while he was unpacking boxes in his new house, on a phone he’d received that day. On the line was Iain Klugman, the CEO of a local organization called Communitech, a private not-for-profit company devoted to supporting startups, inviting him out for dinner. Still reeling from the stresses of the move, Mr. Woods suggested they talk Monday and figure something out. Mr. Klugman was in more of a hurry, and suggested the next night, a Sunday.

The following night, Mr. Woods arrived at a local restaurant to find a group of people with a mission. “I get there, it was Iain, Tom Jenkins from OpenText, David Johnston from the University of Waterloo [now Canada’s Governor General], and a couple others,” says Mr. Woods. “And it was like, ‘Welcome, here’s a glass of wine. Okay: What are you doing for us?’ Seriously, within five minutes the conversation was ‘we need to talk about what Google is doing for us in town.’”

Mr. Klugman makes no apologies for his cajoling, and his efforts have been paying off. Waterloo, long considered little more than the home of BlackBerry, has become one of Canada’s technology hot spots, attracting some of the biggest rainmakers in the business.

Canada has its share of startup hubs where an entrepreneur can set up shop: Toronto, Montreal, Ottawa, Vancouver, and, to a degree, Calgary and Halifax. The Kitchener-Waterloo region is among the smallest by population, with about 550,000 people. But the Southern Ontario centres are among the most successful.

“Internationally, their reputation is off the charts. I’m not sure Canadians understand that,” says Mr. Woods, who has a PhD and a master’s from the University of Waterloo. In just the past five years, 1,845 new technology startups have formed in the area many call KW, raising at least $650-million in investment.

If technology and innovation are the future of the Canadian economy, then the group of dreamers, toilers, coders and entrepreneurs who live 100 kilometres away from Canada’s biggest city think they have the inside track.

“We believe there’s this future where Waterloo is one of the top cities for technology in the world,” says Ted Livingston, CEO of chat app Kik, Canada’s largest homegrown social media company, headquartered in Waterloo. “Right now, for those of us inside, that’s already true.”

‘ONE OF THE BEST PLACES IN THE WORLD TO BUILD A TECHNOLOGY COMPANY’

The names Research In Motion and BlackBerry will always define Waterloo, and former co-chief executives Mike Lazaridis and Jim Balsillie still make their presence felt in the city: Mr. Lazaridis’s Perimeter Institute is harnessing theoretical physics to discover the next generation of technological breakthroughs; Mr. Balsillie is still an active investor in the area.

But this isn’t a story about how Waterloo has been defined by BlackBerry. This is about a generation that grew up alongside BlackBerry and seeks to forge a new identity for the city. At the centre are an indispensable institution, the University of Waterloo, a bunch of young people starting companies, and a dedicated group of community leaders eager to support the region’s ambition to become a world-class technology centre.

Leading this rebirth is Communitech. Founded in 1997 by local tech leaders including Mr. Balsillie, Communitech is funded by all three levels of government, by member companies and by corporate partners. It operates as a hybrid economic development agency, marketing board and business support network.

A compact, tanned man with perpetual silver stubble, Mr. Klugman got his MBA at Wilfrid Laurier University, and his start in marketing at Nortel in the 1990s. Prior to joining Communitech in 2004 he worked in communications for the CBC and the Ontario government.

His job at Communitech is to help the community punch above its weight when it comes to providing support for startups.

“We feel that we have to try harder and work harder because we don’t have a lot of natural assets to work with – we don’t have an ocean or mountains or a beach,” Mr. Klugman says with a shake of his head. But what the region lacks in breathtaking scenery it makes up for with the talent of its residents. “We invented the smartphone here,” he adds, “we invented the foundation for search with Open Text, we invented the touchscreen display here, we were at the forefront of wearables here.”

Attempting to keep track of the startups setting up shop in town is one of many tasks Mr. Klugman performs. In 2010 some 155 startups registered with Communitech; that figure doubled the following year, and topped 500 in 2014. Some of those new ventures – Miovision, ClearPath Robotics, Aeryon Labs and Thalmic Labs, among others – have attracted a lot of buzz and investment. There have been stumbles, too, notably Communitech’s Hyperdrive accelerator that failed to take off.

If things were moving any faster, Mr. Klugman fears, a scarcity of talent might force companies to pump the brakes. “The first thing somebody does when they do a startup is they want to raise some money and hire three people. So you’re talking about 1,500 people immediately,” he says.

Indeed, a 2013 PriceWaterhouseCoopers survey attributes more than 20,000 jobs to the region’s innovation ecosystem.

Communitech’s efforts have included startup mentoring and peer-to-peer networking, and its latest plan is to give entrepreneurs a head start on building a sales strategy. It does all this by hosting events, encouraging executives of established firms to participate in its education sessions, luring venture capitalists and lobbying various levels of government. And fledgling firms needed the help because, says Mr. Livingston, “It’s a massive disadvantage in partnerships and funding and press not to be in Silicon Valley.”

But that’s changing. “Waterloo right now, I have to believe, is one of the best places in the world to build a technology company,” says Dave Caputo, CEO and co-founder of Sandvine Inc. which mixes hardware and software to optimize the flow of data over some of the world’s biggest telecom networks. And he would know: He’s done it twice in the past 20 years – first with PixStream, a video conferencing company, which he and his co-executives sold to Cisco Systems in 2001, and now Sandvine.

“I assumed that Communitech-like organizations were everywhere, but I’ve come to learn that they are relatively rare,” says Mr. Caputo.

For decades, global tech companies set up shop in Waterloo even if it was just to recruit and ship out talent. Intel, Electronic Arts, Google and SAP moved in alongside local enterprise tech companies such as OpenText, Descartes and Desire2Learn. Waterloo engineers can be found in large numbers in many of the biggest companies in the capital of global tech, Silicon Valley. But now, local players say, people with those skills have reason to stay.

“Let me say what’s changed here: It is now an absolute career alternative of students graduating from Wilfrid Laurier University and University of Waterloo to say, ‘I am gonna start off as an entrepreneur,’” Mr. Caputo says. “There was significantly less of that when I graduated university. The idea was, if you wanted to be in technology … go make your mistakes with some big technology company, and then eventually you might want to start a tech company.”

THE VALUE OF A CO-OP EDUCATION

Is there one thing that you could take away from KW that would make it disappear as a tech ecosystem? “To me, the answer to that question actually is yes,” says Mr. Livingston of Kik. “And that one thing, and one thing only, is the co-op program at the University of Waterloo.”

The school’s system is unique: It takes five years to do a four-year undergrad degree in many programs because students are expected to complete up to six co-op placements. Last year, the university filled 19,250 placements in 40 countries, and the students earned $225-million in wages. Not bad for a university with 35,000 full– and part-time students.

“There is no other institution in this world that does co-op like we do,” says university president Feridun Hamdullahpur. “We are leading in entrepreneurship and innovation that I don’t see anywhere else that is so successful.”

One measure of the co-ops’ effectiveness can be seen in the statistics the university collects on employment outcomes. The university claims a 98-per-cent employment rate within two years of graduation. Some 74 per cent of 2011’s co-op grads were earning more than $50,000 a year by 2014, compared with 39 per cent for all Ontario graduates. Waterloo’s student debt default rate is among the lowest in the country: 1.7 per cent of grads couldn’t pay their debts two years after graduation. The second-lowest rate in Ontario is the University of Toronto at 4 per cent, and at most post-secondary institutions it’s more like 10 per cent.

Kitchener-Waterloo benefits enormously from the placement of all those talented students. In 2015, 3,374 work terms were served in the area.

Mr. Livingston, who did his co-op placement at BlackBerry, says the international success of his company’s popular app means he has every reason to relocate. “And yet we still stay here, and it’s because of this access to the co-op talent, period, full stop,” he says.

“We invented the smartphone here, … we invented the touchscreen display here, we were at the forefront of wearables here.”

Iain Klugman, CEO of Communitech

The university also operates one of the key breeding grounds for some of the region’s most famous tech startups. More than 100 companies have been created out of the university’s Velocity program, a non-academic hub that started in 2008 with the Velocity residence, a dormatory the university filled with its most entrepreneurial students.

Among other services, Velocity offers students free office space for a period of time, and lab space on the university grounds. There’s also the Velocity Fund, a pool of money made up of university cash and donations. It distributes $125,000 to seven startups three times a year.

“Velocity is really unique in that everything non-academic is Velocity. Everything we do on campus is about creating awareness and creating the experience of entrepreneurship,” says Mike Kirkup, who heads the Velocity program. “What a lot of other universities really struggle with, they’ve only built a piece of the puzzle. Berkeley has eight different entrepreneurship programs, one in engineering, one in business, so they don’t connect all the pieces together.”

“Most of the items we deploy focus on lessons learned from others and our own challenges or opportunities,” he adds.

Among the early Velocity participants was Eric Migicovsky, maker of the most talked about non-Apple smartwatch, Pebble, which holds the crowdfunding record from U.S. site Kickstarter.

A more recent grad is Rachel Pautler. She and her two co-founders came to the University of Waterloo for one of North America’s only undergraduate degree engineering programs specializing in nanotechnology.

“We honestly all applied to nano because it had the highest admission average and we thought we wanted that. You need over a 95 [grade average] out of high school,” says the 23-year-old from nearby Cambridge, Ont.

Ms. Pautler believed she was going to be a professor, but it only took her three co-op terms doing nano lab work to realize she hated pure research.

Engineering students at UW have to do something called a capstone project in their senior year. Some people build solar cars, others build new highly sensitive radio sensors, but Ms. Pautler had a problem to solve: “I get sunburned super easy, and I hate it because I get sunburned wearing sunscreen,” she says.

After a session of yelling at each other in a room with a white board, Ms. Pautler’s team came up with a concept: not a new sunscreen, but a type of ink that that would change colour when it sensed UV rays, which would tell you when it was time to re-apply.

“We took it to a professor, he said, ‘That’s awesome. You should start a company.’”

They did and their company, Suncayr, has become an example of the many supports in the university’s startup ecosystem. The co-founders used some of their co-op sessions to develop their idea. They perfected the product at the Velocity lab, won several cash awards from the university and met drug-company sales reps and retail buyers during networking events at Communitech. After graduating this year, Ms. Pautler’s Suncayr team moved into the Velocity Foundry space, with plans to stay in the region for at least the next few years.

“The education of the future engineer is based on three main beliefs,” says Pearl Sullivan, the university’s dean of engineering. “Experience early – that’s what co-op does. Innovate early – if you have an idea, go for it. Finally, incubate early – if we can help you take your idea to the next level, we will help you.”

“The lesson here is that maybe the role of university is not to just to complete a five-year program in engineering,” she says. “Maybe the role is to ensure the ideas they have go beyond the academic program and help them to deploy them so it is a successful venture, so they can strengthen the ecosystem, and the economy of the country.”

CIty Building

One of the key elements of the Kitchener-Waterloo startup ecosystem is the impact it has had in shaping local infrastructure.

Under David Johnston, who served as the university’s president from 1999 to 2010, the school was a major player in helping launch a project to remake the downtown of Kitchener. It’s an area that 28-year-old Michael Litt, CEO of video marketing startup Vidyard, says was “the place where I was not allowed to go growing up.”

“In 2005 when I started with the city, you could shoot a cannon down the street any time of the day or night and not worry about hitting anybody – there was a lot of vacant retail space,” says Rod Regier, executive director of the city’s economic development team.

In 2004 the city set up a $110-million fund for an economic-development program financed through a 1.2 per cent property tax hike over a 10-year period. The university used $30-million out of the fund to help build a new pharmacy school in the downtown area. Other money went toward cleaning up industrial sites and transforming warehouses.

One of those sites was the Lang Tannery. Once the largest tannery in the British Empire, it stopped curing hides in the late-1950s, and its 450,000 square feet of space spread across more than 40 buildings stumbled through a number of iterations, including a paintball range. It was purchased by a Toronto-based developer in 2007, and the city spent almost $1-million of its strategic fund cleaning up contaminants on the site.

“The true genesis of that project came in May of 2007,” says Mr. Regier. “We held a meeting of half-a-dozen tech, university and Communitech leaders, here at City Hall, to ask what was the future? How could we leverage the assets of our creative industries?”

Indeed, the first anchor tenants for the redeveloped complex were Communitech, Google and education-software firm Desire2Learn. More tenants came along from the university’s Velocity program.

The impact has been transformative. In 2002, realtors told the city there was essentially no condo market for the downtown; now there are three newly opened condo developments, and more on the way.

“When we got down here, there were no startups,” says Google’s Mr. Woods. “There must be 500 startups within a couple of kilometres of here now. And at least 100 within two blocks.”

 

Among the notable startup tenants are Thalmic Labs, across the street from the Tannery, and offices for Vidyard, MappedIn, ReeBee, Igloo, Renomii, and Sweet Tooth are all in what the city now calls its “Innovation District.” According to Kitchener’s planning agency, 1,300 jobs moved downtown between June 2013 and June 2014.

The city, province and federal government are also spending more than $800-million on a new light-rail transit line to connect downtown Kitchener to the University of Waterloo campus. And there are plans for a new train service between Kitchener and Toronto, which Mr. Klugman and his peers hope will help create a “super-cluster.”

Can startup activity pay for all this infrastructure?

“If you add up all the development sites within a five-minute walk of the [train] station, we’re going to put together at least five-million square feet of new development in the next 10 to 15 years. That is essentially 10 Tanneries, maybe 4,000 new residents, in that pedestrian area,” says Mr. Regier.

To be sure, many challenges remain, and one of the biggest is financing for startups. Despite a string of local success stories, venture capital financing remains paltry in Canada. Recent studies show that the total amount of venture capital investments in the U.S. surpassed $48-billion (U.S.) last year, with 60 per cent of it being spent in California, mainly in the tech sector. In Canada, by contrast, the total amount raised in 2014 was about $2.4-billion (Canadian).

Access to capital is not the only metric worth measuring, but it can be a useful proxy to discuss scale. For a technology hub to rival Silicon Valley, it needs to at least get in the ballpark in terms of the level of investment. The other crucial metric, however, is human capital, and the region’s reputation starts with the quality of the locally grown talent. And that resource needs to keep growing.

One of Mr. Woods’s priorities in Waterloo has been to repatriate Canadians who are ready to come home after working abroad, and also to recruit non-Canadians to the region. “Mike Lazaridis made this argument, that if you bring 15 people in and one starts a company, you’ve paid the tax on all the others for a generation,” he says. “That’s what we need, that’s what Silicon Valley did. We definitely don’t want to slow the wonderful growth of this ecosystem through a lack of talent.”

Original Article

New office building the latest sign of downtown Kitchener’s rebirth

The six-storey Class A tower, when complete in 2020, will be steps to transit in the tech-friendly Innovation District