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Gimme Shelter
Some entrepreneurs go to a lot of trouble to find a location with great real estate at a great price. That was one of the benefits of Black Diamond's big move from Ventura. The company now operates out of a funky, rambling Swiss-village-style headquarters, which CEO Metcalf acquired almost by accident. Originally, he had planned to move the company to offices on the outskirts of Park City, around 15 miles from Salt Lake City, in the heart of ski country. But when a developer's financing for a new facility there fell through, just five months before Black Diamond's Ventura lease was up, Metcalf went to his backup: Salt Lake City. After he'd spent a day "traipsing around looking at crap," Metcalf says, his broker mentioned a listing for an abandoned shopping center in foreclosure.

The cuckoo-clock architecture bordered on kitsch, but Metcalf liked what he saw. "This place is eclectic. It personifies Black Diamond," he thought.

Thanks to Utah's then-depressed economy, he bought the whole place for "barely seven figures," he says, what he calls "the price of a cheap house on the beach in Ventura." Now the half-timbered buildings shelter not only Black Diamond's corporate offices but a manufacturing plant and a warehouse that total approximately 60,000 square feet. There's also a retail store that sells Black Diamond products; a restaurant; and a climbing gym where Black Diamond employees go when they feel the need for altitude. It's a "poor man's Microsoft campus," Metcalf says. "People love to visit; people love to work here."

Lumatec's Altman also bought a building in foreclosure, a former chicken-processing plant in a borderline neighborhood. "I looked at it, and we were actually pretty scared," says Altman. "It was in disarray, and nobody wanted it."

But because the building was in an economic-redevelopment zone, the city of Austin helped fund the $410,000 mortgage and also gave Altman $150,000 for renovations -- as long as he pledged to hire workers from the area. Fully revamped into a smart, airy, modern facility with concrete walls in bright teal and purple, the building now houses both Lumatec's executive offices and a small manufacturing plant. Ironically, real estate just like Altman's has become red-hot in Austin right now as Internet entrepreneurs spurn modern office parks for cool old industrial buildings.

Phoenix, with its shining boom-time crop of office towers, gives the impression of having been unwrapped and assembled from a kit just this morning. It just doesn't have a lot of old buildings. But back when Eric Crown was starting Insight, the city's traditionally boom-and-bust economy was in a slump, which meant that finding office space to accommodate a rapidly growing company was no problem. Crown recalls that his first landlord gave him a year's free rent on a three-year lease. Even after the economy recovered, land was still plentiful and cheap: Insight's 103,000-square-foot corporate headquarters, with its four large stadiums, cost just $10 million to build. Not exactly lunch money, but a lot less expensive than it would have been in, say, midtown Manhattan.

Customers, Customers, Customers
If these cities are so great, why don't all entrepreneurs put their businesses in Austin or Atlanta? Why are there so many businesses rooted in what Birch considers harsher environments, like New York City and Detroit?

For Todd Abrams, who founded Empire Graphics in New York City eight years ago and has made it to the Inc. 500 twice since, the answer is simple. That's where his customers are. Despite higher rent, labor costs, and taxes -- all of which are about 10% more, he says, than he would pay in the suburbs -- being in the city gives him a clear-cut advantage over his competitors in New Jersey and on Long Island, Abrams figures. Turnaround times are lower, and customers in the city can check proofs more easily. "We really felt that clients need to touch and feel jobs," he says.

Not that it's easy to run a manufacturing facility in Manhattan. When Abrams needs to install a new press -- which can run to 100 tons and almost 70 feet in length -- he has to hire a crane, block off the street, and bring the machine into his fourth-floor space through a window. It's a $20,000-to-$30,000 job. But for a sales-driven company like Empire, there's nothing quite like the density of potential customers that you find in Manhattan, where, Abrams says, a good salesperson can make up to eight sales calls a day. "To me the Metrocard is a windfall to salespeople," he says, referring to the unlimited-ride pass to New York's subways. "I figure I save $300 a month. You pay one price and you make all the sales calls you want." (Abrams recently sold Empire but continues to run it.)

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