How Waterloo Region Attracts More than Just Tech Firms

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tannery building kitchener ontario
The Tannery Building is a historic reclaimed factory building in downtown Kitchener which is now home to several expanding tech companies and organizations.

Waterloo Region is often thought of as a technology centre but diversification is one of the region’s greatest assets. Its economy runs deep into automotive, advanced manufacturing, financial and professional services, food processing and logistics and distributing.

Demand for industrial real estate is extremely strong, says Peter Whatmore, executive managing director for CRBE, southwestern Ontario.

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“You can sell or lease whatever you get your hands on if it’s a good product.”

He expects strong construction activity throughout 2018.

Institutional and large corporate investors are moving into Waterloo in a “natural migration out of the GTA,” said Ted Davis, managing director and broker of record with Avison Young, southwestern Ontario.

“From a capital market investor standpoint, GTA prices are so high and returns are so low, that investors can’t find deals. So they are looking to what was once considered tertiary markets and chasing returns into Waterloo.”

When commercial investors talked about “west of Toronto,” they used to mean Mississauga, Brampton and then Milton. Now it’s Waterloo Region.

“Some GTA companies have little choice but to look at moving west,” echoed Whatmore. “GTA prices are becoming restrictive.Waterloo is two to four less expensive but still has the diversified employment base.”

Investors and tenants from the GTA are joining the strong growth of home-grown companies and a surging contingent of talent seeking affordability and quality of life.

A huge advantage of the region is that the critical infrastructure to attract commercial investment – strong and connected transportation links, public transit service, a deep and skilled labour pool, educational partners, urban and cultural amenities – is already firmly established.

There is also a deep network of supports to foster and grow start-ups, retain talent and commercialize local research, says Davis.

“From start to finish, the foundation is there in Waterloo to grow companies.”

While office vacancy rates remain high in Waterloo, about 17.5 per cent in the fourth quarter of 2017, according to CBRE data, office lease transaction volume reached its highest level in over five years in Q4 2017 and significant new development signals pent-up demand for quality office space, says Whatmore.

A downtown Kitchener tower by Perimeter Development Corp. will cater to an elite professional services tenant and is the largest in Waterloo Region in two decades.

“It’s very exciting and it will attract attention across the industry. We are anticipating some additional announcements this year.”

Read the full Perspective Waterloo feature here.