In West Coast hotbeds of the dot-com boom and bust such as San Francisco, Silicon Valley, and Seattle, corporate real estate prices have dropped by as much as 40 percent since February, according to a survey just released by Smith, Berger & Company, an independent real estate valuation firm located in Chicago. And elsewhere nationwide, most notably Atlanta, Dallas, Denver, Minneapolis, and Orlando, speculative overbuilding of office space combined with the slowing economy is setting rents on a downward path.

In San Francisco, the funky South of Market area - once populated almost exclusively by dot-coms - now has a vacancy rate of 20 percent, conservatively estimated by Silvia Bocatto, senior analyst with Smith, Berger & Company.

"A year ago, the vacancy rate was 3.6 percent in SoMa," says Bocatto, "but now, since so many startups have either gone under, laid employees off, or abandoned plans for expansion, there's plenty of office space. The law of supply and demand is taking effect and rents are coming down - the market was outrageously expensive and now it's less unreasonable, more balanced. The result is this: As Internet space comes on the market, there are lots of bargains to be had."

Internet vacancies are not the only cause of "less unreasonable" terms when it comes to rents and leases. Although the cost per square foot of commercial real estate is still high in many metropolitan centers, the amount of new, unleased office space is on the rise and could reach worrisome heights if the dot-com shakeout, coupled with severe downsizing in old economy companies, continues unabated.

Construction of speculative space, which is office space that is developed before a tenant is found, is particularly heavy in areas that expanded rapidly with the growth of the new economy. This year, the total footage of speculative space entering the market is the highest it has been since 1985, according to the Smith, Berger & Company survey. All of this extra space is coming out of the pipeline just when technology and e-commerce businesses are dumping space on the sublease market.

While experts feel a corporate real estate crisis - drastic and widespread decreases in rents - is unlikely, they do agree that now is an excellent time for small business owners and nonprofit groups to find fully-developed space at realistic prices. In addition, developers and landlords alike who are eager to rent space are more inclined to sweeten deals now than they were a year ago.

"Prospective tenants will find that it's starting to be a renter's market in many parts of the country," says Bocatto. "Go ahead and negotiate for improved interior work, or a couple of free months of rent, or parking discounts for your employees. You'll be surprised at how approachable landlords and developers have become. If the playing field isn't quite level yet, it will be soon."