The Bend Downtown Athletic Club opened in the Franklin Crossing building more than two years ago, when the economy was booming. But as the recession hit, business at the club also began to slide.

Club co-owner Gary Hughes approached his landlord at Franklin Crossing last year, and together they reached an agreement to lower the club’s rent.

“Without them, it would have been very difficult to get through this time,” Hughes said. “People are a lot more willing to work with you if you’re honest and upfront from the get-go.”

Since the recession first hit home, financial incentives offered by landlords to existing and incoming tenants — offers such as reduced or deferred rent that were once merely thought of as deal-sealers — have become commonplace. When businesses suffer from a lack of sales, many landlords forgo some rent revenue to keep tenants in place.

And these days, the deals landlords are making to attract renters to open office or retail space have only become sweeter: months of free or discounted rent, higher allotments for improvements to make an office space fit a tenant’s needs and other incentives offered on a case-by-case basis.

“Landlords are extremely aggressive right now,” said Darren Powderly, a broker with Compass Commercial Real Estate Services. “Getting 30 percent less of the peak value of rent is better than zero.”

At the Old Mill District, developer Bill Smith, who’s president of William Smith Properties Inc., lets about four or five of the companies in the district pay rent in a fashion that is typically reserved for the nation’s largest retailers: based on their sales.

Depending on the arrangement, some companies pay anywhere from 6 to 10 percent of their monthly sales to Smith as their rent, instead of paying based on the building’s square footage.

Before the recession, the practice was much more common among larger, publicly traded retailers. Because they are publicly traded, they must keep detailed track of their sales numbers, which means landlords know the stores aren’t adjusting numbers to make rent cheaper, Powderly said.

But now, because many smaller retailers are in such dire straits, the format has trickled down to businesses like those at the Old Mill District. If they make no sales, they pay no rent, Smith said.

“We’re sharing the gamble, so to speak,” he said.

Smith’s handiwork has paid off. The Old Mill District has a 3 percent vacancy rate, according to Compass Commercial’s quarterly newsletter.

Bend’s overall office vacancy rate was at 19.1 percent for the second quarter of 2009. Downtown was at 17 percent, and Third Street was the highest, at 24.7 percent.

Smith said he focuses less on bringing in new tenants and more on keeping the ones already there. When negotiating with new tenants, however, Smith said he offers the same incentives he always has, such as money to improve the building space and rent discounts.

Overall, the office vacancy rate for Bend’s west side is 17.6 percent.

One of the more high-profile buildings seeking tenants is The Point, located at 929 S.W. Simpson Ave., across Colorado Avenue from Deschutes Brewery. The 32,000-square-foot building has been vacant since it was completed in September 2008.

The building’s brokerage company, Oliver Commercial Group, signed letters of intent with companies to fill almost all of the office space before the building opened. Then, the companies backed out one-by-one because of the economy, said Amy Cawrse, a broker working on the building.

The Point’s owner has dropped rent to $1.65 per square foot from as much as $2.05 in 2008, Cawrse said. And the owner, Bonnett Point LLC, is offering $50 per square foot for tenant improvements.

That kind of assistance for tenant improvements shows owners recognize how tough it is for renters to pay renovation costs, Powderly said. In good economic times, Powderly said a landlord and tenant would split the costs of improvements, or about $30 each, for example. Today, landlords are offering to pay most, if not all of the improvement costs, he said.

“… It’s a good time to have your lease come up,” Cawrse said.

Landlords are working hard to keep tenants in their buildings, Compass’ Powderly said, noting that it’s cheaper to keep a tenant in place than to spend time marketing a vacant space.

And landlords should not take just any tenant into a building, said Scott Gibbs, property manager of Lowes Property Management. Landlords should be certain that potential tenants operate efficiently, that they fit with the other tenants and that they won’t devalue the property, Gibbs said.

In negotiating deals with landlords and renters, Gibbs said he has recommended incentives such as returning deposits midway through a lease or establishing a graduated rent structure, where rent is cheaper at the beginning of a lease and increases over time to an agreed-upon cap.

“(It’s about) creatively structuring the transaction itself, so that both parties are satisfied with the deal,” Gibbs said.

Joe Bankofier, who owns the Franklin Crossing building where the Bend Downtown Athletic Club rents space, said he and his partner have succeeded at keeping their building full because they communicate frequently with tenants. He said Powderly, their broker, has helped develop innovative ideas, such as not charging tenants rent if they’re unable to pay.

“Just sitting and talking with tenants and just working with them goes a long way,” Bankofier said.