Fast-growing Chumbo, a Minneapolis-based online softwareretailer that has grown from 17 employees to nearly 100 in lessthan two years, needed more space, says Tim Burton, its president.But rather than go for the towers of glass and steel, firms likeChumbo prefer the funky old charm of the old ones, as long as theyare thoroughly updated. Besides the funky charm, they also likeample parking, the nearby entertainment district and cheap rent. Onaverage, rent is probably a third less than space in the coredistrict, from $15 to $20 per sf in the warehouse district; rentswould range from $20 to $30 or more in the downtown businessdistrict, according to brokers.

All over the warehouse district, Internet companies such asBitstream Underground, Chumbo, the Geek Squad, Embedded Logic aremoving into space once occupied by manufacturers and warehouses,such as S&S Warehouse, Fisher Paper Box Co. and CreametteNoodle.

But Internet companies like Chumbo represent a challenge forlandlords and developers. While these up-and-coming companies likethe old-style charm of renovated warehouse buildings, landlords area bit uncertain about just what kind of risk their new tenantspose, and how to minimize those risks.