When tech startup Plasticity Labs was looking to return to Canada from Silicon Valley, they considered Barrie, Ottawa, London and Toronto as possible destinations before ultimately settling on Waterloo Region.

They landed at the Communitech Hub in downtown Kitchener, where they’ve since expanded to become a seven-employee operation.

Company founder Jim Moss expects them to outgrow their space at Communitech – which has room for an additional three hires – before the end of the year.

“We’ll probably jam people on top of each other’s laps here to stay close until we can find the right place,” he says.

Moss thought he’d found the right place with the Breithaupt Block complex, blocks away from Communitech – but earlier this month, Google announced plans to take the space he had his eye on.

That has Moss worried he’ll have to head to an industrial area, or even leave Waterloo Region altogether.

“We’re running out of places,” he says.

“The tech community’s growing faster than the town can accommodate, but we want to stay and we want to be close to Communitech.”

Plasticity Labs isn’t the first company to have those concerns.

Kitchener Coun. Scott Davey says he’s heard similar issues raised by a number of startups.

That’s why he likes the sound of a matching grant program proposed by the city’s downtown development branch and endorsed Monday afternoon by Kitchener’s finance committee.

“Startups really have this preference for older, brick-and-beam style buildings – but there isn’t really that much space left,” Davey tells CTV News.

The grant program would see the city pay part of the cost to renovate older, vacant buildings in the downtown.

The city would pay as much as $20,000 of renovation costs per floor, up to a maximum of two floors, but only if the company invests the same amount of its own money.

“There’s a critical phase when startups are very small, that they’re really deciding where to go,” says Davey.

“If we don’t start supporting them … then we’re going to end up having a lot of the buildup that we’ve had leaving the region.”

In addition to retaining startups and fixing up older buildings, Davey says the city also benefits from the project by collecting tax revenue from buildings that would likely be sitting vacant otherwise.

Of course, not every older building in downtown Kitchener sits empty.

Alita Petschegood has operated Petsche’s Shoes out of a rented storefront on King Street for the past 20 years.

She’s seen plenty of changes to the neighbourhood since then, and likes the sound of the grant program.

“As much as the downtown core can be built … I would be on board with that,” she says.

Other downtown businesses aren’t as happy.

Medhim Berha runs A-Z Convenience Store on Water Street.

She says there’s little foot traffic outside her business, aside from Friday nights, and doesn’t see how tech companies that don’t have customers coming and going would change that.

“It is good to help the tech companies, but we need help too. We’re struggling,” she says.

The program must still be approved by Kitchener councillors, who were scheduled to discuss it Monday night.