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Gantry cranes at Port Metro Vancouver rise in the distance as a woman cycles past Inform Interiors on Railway Street in Vancouver. In a city with diminishing industrial space available, the Railtown district is emerging as an enclave for ‘creative product manufacturers.'DARRYL DYCK/The Globe and Mail

Vancouver’s Railway Street feels like a street festival this morning, as it does many mornings, with hordes of twenty‐ and thirtysomethings ambling along the street and clustering at the cafés, food trucks and restaurants on their break.

This street in the middle of Railtown is an odd patch of the city, a long strip of territory three blocks wide, squeezed between Vancouver’s poverty-stricken Downtown Eastside and the port.

But it’s one that is seen as a much-needed crucible for tech and creative businesses trying to stay in this expensive city – businesses such as Hootsuite, which started out here before growing explosively and eventually moving further up the hill from the port to take over several buildings in the Mount Pleasant industrial area.

Now, after a nearly year-long tussle between city planners and business owners over changes to the zoning meant to encourage what’s called “creative product manufacturing” but to keep out regular offices just looking for cheap space, the Railtown neighbourhood appears to be on the verge of a small development boom.

Existing businesses such as fashion giant Aritzia, bag manufacturer Herschel and high-end furniture maker Inform are expanding. Other new businesses are moving in. And, beyond that, there are several development projects in the works.

“There is quite a bit of new energy here,” says Denise Brennan, the “benevolent dictator,” as she describes herself, of the shared job facility Creative Coworkers. Next to her is a showroom and administrative office for Nespresso, the coffee company, and Streamlabs, which produces streaming video games. “There’s a higher level of recognition of the neighbourhood.”

Like many, she says the city changes to the zoning definitions for the neighbourhood have generally made things better. The restrictions on height, or on having one business occupy all of the space in a building, have created spaces for a lot of smaller businesses and have kept the area feeling intimate.

The new projects coming in, the first to be built in the area in decades, are designed to fit into that.

One proposal is for a building by Rendition Developments called the Maker Exchange, a 150,000-square-foot project aimed at those “maker tech” businesses, as they’re called locally. Another that began construction this month is the Bench building, also from Rendition.

Commercial broker Boe Iravani, with Cushman & Wakefield, says the area is appealing to people priced out of the downtown or even Gastown, or those wanting to move in from the suburbs to something more central.

“The activity is high. People don’t want to be downtown. They can’t be there, at $50 a square foot. Even in Mount Pleasant” – the city’s other big tech hub – “it’s expensive now. Here, we’re in the mid-30s [dollars per square foot].”

There are still some glitches to work out. Steven Fast, who owns property in the area, said that although city planners approved creative-product manufacturing as a use, there wasn’t a definition attached to that new term in the zoning bylaw.

As a result, people applying for business licences at city hall were being told that each tenant would have to be evaluated individually to see whether they met the restrictions on uses in the area.

“Now, with this inconsistency, we’re kind of at a loss,” says Mr. Fast.

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The proposed 150,000-square-foot project Maker Exchange in Vancouver is aimed at 'maker tech' tenants, hence its name.

The new zoning keeps out uses like lawyers, which is fine with Railtown businesses, but also prohibits architects – a sector that many thought would fit well with Railtown’s image as a design district.

In spite of those problems, Mr. Fast’s building at 329 Railway St. is full and has a waiting list.

But the popularity of that kind of space, as well as the level of angst that permeates any discussions about zoning for tech and creative industries in Vancouver, is a sign of the struggle the city is having as it tries to accommodate those businesses.

That’s because Vancouver, already a smaller city than the tech monsters of the West Coast, Seattle and San Francisco, gave up a lot of its industrial land close to the downtown to residential uses years ago.

The efforts to make Railtown a design and tech hub is “too little, too late,” says Tom Hutton, a University of British Columbia planning professor.

He notes that, in the mid-1980s, the city’s planners and politicians decided that it should use the industrial lands that lined much of the perimeter of Vancouver’s downtown peninsula for housing.

That policy, called “Living First,” generated an explosion of condo development around Coal Harbour and north False Creek from the 1990s until the present. It set Vancouver on a path that made real-estate development a dominant industry in the city, one that could outbid other sectors.

“The problem is that the condo project effectively dispersed other opportunities and set Vancouver on a new trajectory,” says Dr. Hutton, who has studied the tech sectors of other West Coast cities.

Seattle, just 220 kilometres to the south, went on a different trajectory. After the public rejected the idea of developing land in an industrial area called South Lake Union in the mid-1990s, the area sat untouched for two decades, until the tech boom took off. Now it is home to huge amounts of Amazon office space, as well as biotech and other health-science operations. The area is 145 hectares, significantly larger than Vancouver’s Railtown, Gastown, Yaletown and Mount Pleasant tech districts.

Railtown is “kind of a boutique scale, new-economy area that will never look like South of Market [in San Francisco],” says Dr. Hutton.

The land shortage has meant that there are noticeable tensions as city planners try to set rules for what can and can’t be in the districts that are designated industrial, like Railtown and Mount Pleasant. Trying to decide what digital-based businesses qualify as “industrial” has been a challenge.

Dr. Hutton says he admires the efforts of Vancouver’s chief planner, Gil Kelley, to create an innovation plan that will help support more Railtown-like businesses in the city.

But, he says, it’s going to be tough. “We’re really dealing with trying to squeeze pretty important industries onto diminishing pieces of land.”

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Bag manufacturer Herschel Supply Co. has its headquarters in Railtown and is one of the many expanding businesses in the neighbourhood.DARRYL DYCK/The Globe and Mail

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