Like other entrepreneurs before him, Byrnes stumbled on an odd twist in Northern Virginia’s white-hot commercial real estate market. The state may be reaping reap the fruits of high-tech investments, but these Internet upstarts are not every landlord’s dream tenants. Landlords know not many of today’s high-flyers will live up to the bright profit expectations suggested by their stratospheric stock prices. Most could fail to make a nickel, and landlords don’t want to get stuck holding millions of dollars worth of broken leases.

So landlords and commercial developers are protecting themselves. In Northern Virginia’s technology parks, for example, six- and seven-figure security deposits are required more frequently. Leasing negotiations can get testy as dot-coms demand plush improvements and the latest in electronics and high-speed communications. In exchange, landlords insist on protecting their upfront investments with massive down payments on the rent. Careerbuilder, the online job-search company, was forced to pay a $1.6 million deposit on more than 50,000 square feet at the Parkridge Center in Reston — even after company officials raised $60 million from investors in an initial public stock offering.

This kind of rough treatment isn’t unusual, real estate executives claim. Clark Rheinstein, chief financial officer and director of leasing for Walker & Co., Careerbuilder’s landlord, says real estate companies have traditionally exercised the same caution toward new companies in all industries. His firm usually demands that start-ups pony up security deposits — often in the form of a letter of credit — of 18 months to two years’ rent, depending on the improvements to the space. A company with five years of significant profits can reduce its security deposit to just six months’ rent.

How do Realtors assess potential dot-com tenants? Just as they do any other. They look at the company’s sales and earnings. If a company has neither, landlords scrutinize the company’s business plan, the strength of its financial backers and the health of its balance sheet. Landlords simply want to minimize broken leases and the chance they won’t recover the money they spend on improvements demanded by tenants. "Credit is the prime issue," says Paul Kreckman, vice president of Virginia operations for Highwoods Properties, a Raleigh, N.C.-based real estate investment trust that develops and manages properties in Richmond and Hampton Roads. "There’s a fairly high failure rate for all companies. The question the landlord tries to answer is, ‘Will this be one of the survivors?’"

For his part, Byrnes of Paladin isn’t angry with the landlords who rejected his business. He expects to do the same thing to some of the companies he’ll consider as tenants in his incubator. His new business will evaluate the viability and earnings potential of start-up companies before taking them on as clients. He’ll take a small equity stake in the companies he likes in exchange for a year’s worth of rent in high-quality office space, technical and administrative support, venture-capital advice as well as accounting and other business services. "We’ll evaluate the people [behind the company] and the business potential of their ideas. The ones we like, we’ll take in and work with them," he says. That’s good advice during the Net’s go-go years of high hopes and fantasy valuations.