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Jonathan Gushue, poses for a photograph on Nov. 18, 2015 in what is now The Berlin restaurant, which opened Dec. 21 in Kitchener.Darren Calabrese/The Globe and Mail

When Michael Litt was a kid growing up in suburban Kitchener, Ont., in the 1990s, "downtown" was off-limits. Kitchener's core had become a virtual wasteland, as suburban malls sucked away retail space and customers in the 1970s and '80s. It had a reputation for fighting, homelessness, and even drugs and prostitution. "It wasn't a place to go grab dinner with the family," says Mr. Litt, co-founder and CEO of video analytics firm Vidyard.

But in recent years – fuelled by tech startups such as Vidyard that have come percolating out of the University of Waterloo – there's a renewed vibrancy to Kitchener's downtown. It has a new moniker (the Innovation District) and in the past 3 1/2 years, 45 startups have set up shop there, spawning 800-plus jobs. Most came out of The Communitech Hub and Velocity Garage, two high-tech incubators located in an uber-cool converted leather tannery.

New business growth has in turn led to revitalization. Office space that was once half-empty is filling up. Two new condo buildings and a host of funky shops and restaurants have opened their doors. And by next year, a new light-rail service will be available for the burgeoning population of young professionals.

The change is palpable. At the Adventurers Guild Café, co-owner Kate Cox caters to local the "geek culture" by stocking almost every board game you can imagine and some you can't – RIM Monopoly, anyone?

Even more promising, former Langdon Hall chef Jonathan Gushue's The Berlin opened Dec. 21, bringing to the core a destination restaurant serving modern European cuisine made with locally sourced produce.

"Five years ago, I steered clear of downtown Kitchener," Mr. Gushue says. "But it's almost becoming Canada's little Silicon Valley."

"It really is largely a good-news story," says Chris Plunkett, director of external relations for The Communitech Hub. "People want to live a downtown lifestyle and we're showing that doesn't necessarily have to mean living in Toronto."

But not everyone is in favour of gentrification in the core.

Oz Cole-Arnal, a former Lutheran minister and member of the Alliance Against Poverty (AAP), says poorer residents have already been shifted out to the suburbs in favour of funky condos and gleaming new office space. Most of the social services remain downtown and there's still a homeless contingent, he says, "but there really is no affordable housing downtown any more. The whole city caters to the tech companies at the expense of everyone else."

AAP member Martin Suter points out that in order to access services, poorer people have to take buses all over the city: downtown to meet with counsellors; to another suburb for the food bank. "You need a bus pass," he says. "But they're expensive. When you're only getting $1,100 per month from the government, $67 is a lot of money." Mr. Suter feels the new LRT is being built on the backs of the poor, who are subsidizing its construction through higher fares.

Such complaints find a sympathetic ear in Joseph Fung, who spent some time in San Francisco – where tech-industry-fuelled gentrification has driven up prices and driven out long-standing residents in the core.

Mr. Fung sold his startup, TribeHR, to NetSuite two years ago, but has continued on as vice-president of human capital management. When NetSuite bought TribeHR, it had 16 employees. Just 18 months later, there were 80, housed in an office at 55 King St. W. And earlier this year, the company took over a second floor of the building and construction has begun to accommodate an additional 120 people. That's when a friend of Mr. Fung pointed out that his good news was actually bad news for some of the homeless folk in the area.

The new office space would take the place of a TD Canada Trust branch, Mr. Fung says. "But there were a number of homeless people who often sheltered in the ATM alcove there. We'll be sealing off that shelter as we build our office space."

For Mr. Fung, that was an eye-opener. "I think the tech industry tends to be inward focused," he says. "We spend all this time trying to get people to stay inside to work on exciting software that can change the world. But the result is that we're not always fully engaged in the communities that surround us."

Mr. Suter puts it more bluntly: "My impression is tech companies are a little bit self-absorbed," he says.

Some say the tech sector is not as philanthropic as, say, the manufacturing sector, Mr. Plunkett adds. "But I think part of that is that these companies are fuelled by venture capital and they're making revenue, but they're not yet making profit."

Even when tech companies do make donations, they tend not to talk about it, Mr. Fung says. "It's a very private thing." He believes that has to change. "People need role models and we need to start talking about what we can do to make things better," he says.

Mr. Fung has served on the Habitat for Humanity board for the Kitchener-Waterloo region and also volunteers on a couple of boards within the arts community. "We get teams out into the community on a regular basis, be it packaging food at the food bank or teaching coding at schools," he says.

He also launched an education campaign on the impact of gentrification, and his company has donated money for winter care packages. Vidyard, too, recently held a fundraiser for the K-W social service charity House of Friendship.

"I think we're a long way off from a San Francisco-type situation, but we definitely see some gentrification taking place," Mr. Plunkett says. "Some people do feel marginalized by it and I think it's really important to include them in some way."

After all, points out Mr. Litt of Vidyard, Kitchener-Waterloo's thriving tech community benefits from downtown Kitchener's creative, urban vibe and walking lifestyle, which helps attract sought-after employees.

"There's an arts and culture scene here that definitely does not exist in the land of Best Buy and Walmart," he says. "We'd like to keep it that way."

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