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City council has approved a new plan for an old part of Mount Pleasant.The Globe and Mail

Vancouver wants to embrace its booming new tech industry, but without driving out old-style, real-product manufacturing.

City council has approved a new plan for an old part of Mount Pleasant that redefines what is industrial activity and allows new space for new digital and entertainment tech businesses.

But planners took the unusual step of pulling a recommendation to also recategorize an area near the waterfront called Railtown, the original home of Vancouver's powerhouse tech company Hootsuite. That's to make sure any changes really do foster a mix of uses – and to deal with the uproar from the small but thriving incubator area; many people said the city's new definitions of industrial were too confining.

That included people such as those who work at Monstercat, an electronic-music record label whose operation in the grungy area east of Main includes people who work strictly online and people who produce old-fashioned music-related objects.

"Railtown is already developing naturally into a community of creative, driven and diverse companies. It does not need a restrictive label applied to become a flourishing area," said Gavin Johnson, the company's head of gaming.

He and others objected to city planners' suggestion to create a new zone there called "historic industrial," with a new category of activity called "creative products manufacturing."

Many people working in the area feared the proposed definitions would mean they would no longer be able to count software production as an industrial activity (which would then affect their permission to use a building) and that they would get embroiled in endless calculations about which activities were classified as what in which parts of their space.

The controversy highlights how difficult it is for cities such as Vancouver, once dominated by industries such as welding, metal-plating, boat-building and even forestry in their city centres, to adapt to a new economy.

The city's new planning director, Gil Kelley, said it's a difficult balance, because if the city simply opens up all former industrial space to any operation calling itself tech, but which also looks like an office use, that has consequences.

"If we throw off all the restraints, land speculation will prohibit a lot of the mix of uses that are there now. We're trying to find that mixed economy, to allow in the new without throwing out too much of the old."

Councillor Andrea Reimer acknowledged that Vancouver had backed itself into a corner several decades ago by allowing big swatches of its industrial land to be converted into residential, as part of the drive to create more integrated neighbourhoods.

But, she said, that has left the city scrambling for places to now house the tech industry.

It is one of Vancouver's bright spots, employing 75,000 people in the region, but it is struggling with issues such as lack of available space, a shortage of skilled workers and the city's out-of-this-world housing prices.

Vancouver was ranked ninth among global startup cities four years ago, said Raseel Sehmi, manager of policy and strategic initiatives for the B.C. Tech Association, but moved down to 18 by 2015.

Ms. Sehmi was one of many who spoke at a public hearing two weeks ago, urging the city to be less prescriptive in its definitions of what is tech and where it should go.

"Technology moves so fast, the definitions of software or ICT [informations and communications technology], in five years, those definitions may change again."

City councillors, with only Councillor Adriane Carr opposed, did move ahead with a change to zoning in Mount Pleasant.

That change spells out exactly what qualifies as a manufacturing use or an office use in the area, which now allows both in certain proportions.

As well, it will create a narrow new band of land between Main and Quebec where owners can build larger buildings if they are adding "digital and entertainment uses," on top of the allowed manufacturing and office.

One of the prime beneficiaries of that change will be Ryan Holmes, the chief executive of Hootsuite, and developer Ian Gillespie, who purchased a block of land together in that zone last year. Hootsuite is now a dominant force in that area and its move to Mount Pleasant from Railtown in 2013 kicked off a wave of new tech arrivals and a spike in land prices.

A new real estate report from Royal LePage analyzing trends in the last quarter of 2016 suggests that the GTA will become the hottest housing market in the country in 2017, surpassing Vancouver.

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