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In the 1990s, the merest hint that a high-tech company might be looking to locate or expand in Kanata, Ont., sent developers scurrying to build offices and factories.

It was height of the tech boom, which gave this Ottawa suburb the nickname "Silicon Valley North," and the operating philosophy seemed to be "build it and they will come" - until the bubble burst, leaving a decimated work force and empty buildings.

Today, Kanata has all but fully recovered from the meltdown of 2001, but with it has come some lessons, and a subtle shift in the type of companies setting up shop.

"Kanata is well on its way to a full recovery; and it could be argued that it has already arrived - as evidenced by its current vacancy rate of 7.9 per cent," said Paul Hindo, senior managing director of Cushman Wakefield LePage in Ottawa. At the height of the tech bust, the vacancy rate was about 28 per cent, he said.

Mr. Hindo said most of Kanata's new construction over the past year has consisted of build-to-suits - indicative of the lessons learned in the turn-of-the-century tech crash.

"Many developers were burned due to the frenetic level of new construction leading up to the crash, and with that crash came brand new buildings sitting empty. As a result, most developers will not commence construction until they have secured a major tenant to occupy at least a significant portion of it."

Several industrial projects are now in preleasing stages, comprising a total of almost 350,000 square feet, he said.

Kanata's industrial market, which was not hit as dramatically as the office market during the technology bust, has remained in the vacancy range of 5 to 7 per cent for the past three years. Mr. Hindo said this consistency may be why construction picked up substantially in Kanata over the past couple of years, particularly in build-to-suit projects.

"In 2006, 99,000 square feet was completed for two companies. This year, close to 275,000 square feet has been constructed," he said. "The majority of the businesses that are moving into Kanata are high-tech companies, and in one instance a call centre, who is now looking to expand."

Some of the recent developments in Kanata include:

Multimedia education provider Smart Technologies recently finished a 260,000-square-foot assembly and warehousing facility;

Satellite communications company EMS Technologies built a 105,000-square-foot building, doubling its workspace;

Dell Computer is doubling the size of its call centre, adding a three-storey 148,222-square-foot building at 1001 Farrar Rd. adjacent to its existing 150,000-square-foot site;

Earlier this year, BlackBerry producer Research In Motion purchased a new building at 4000 Innovation Dr. and vacant land adjacent to it for about $30-million.

In August, International Datacasting relocated to Kanata from West Ottawa into a facility that combines research and development, manufacturing and systems integration operations.

While overall demand has slowed, Mr. Hindo believes the future is promising with developers still interested in the office market.

There are currently five office projects being marketed in Kanata, totalling more than 450,000 square feet, but, so far, with no announcements of interest from companies, construction has not yet started. "Currently, these developers are not quite comfortable yet with the situation in Kanata to go ahead and build a building on speculation."

David Chorney, managing director of Colliers International (Ottawa), said the Kanata market has shown signs of returning to its former status over the past few years, with typical net rents returning to $13 to $15 a square foot for class A office space.

Immediately following the tech meltdown in 2000, net rents went effectively as low as zero in some cases because of the abundance of sublet space on the market at the time, he added.

He emphasized he doesn't know whether the current upswing in rental rates and office demand reflects a growth in the high-tech sector specifically, or a shift in the use of space.

When call centre company Sitel Corp. consolidated its operations in Kanata, its former Bells Corners site in suburban Ottawa was soon leased to Resolve Corp., another call centre provider, "resulting in a net increase in Kanata's overall occupied office inventory," Mr. Chorney said.

He speculated the rise of call centres may have resulted from high-tech workers finding themselves out of work following the crash, and having to apply their skills elsewhere. "It's still a good news story for the Kanata market, but is it a high-tech revival or just part of the economy using the skill set we have in abundance here?"

Staff at the Ottawa Centre for Research and Innovation (OCRI) believe the high-tech market is strengthening again.

Sandra Matthews, OCRI's manager of Business Development for Ottawa Global Marketing, said the number of high-tech companies never slumped in Ottawa during the high-tech crash, although the number of workers did but has since recovered.

"Layoffs produced new companies. The number of workers in high tech did go down and has since come back up."

According to OCRI's 2006 Ottawa Technology Industry Survey, Ottawa companies reported adding 3,340 employees into the high-tech sector over the past year. While this is an impressive 4.4-per-cent increase, OCRI says overall growth is limited by a shortage of venture capital and shortage of talent available to fill the increasing number of vacant positions.

Employees in knowledge-based companies

Number of employees in the Ottawa-Gatineau region.

'97: 51,000

'98: 52,000

'99: 65,000

'00: 79,000

'01: 69,500

'02: 66,500

'03: 63,700

'04: 67,800

'05: 76,126

'06: 79,466

SOURCE: OTTAWA CENTRE FOR RESEARCH AND INNOVATION