For years, discounters have been shut out of some markets by image-conscious property managers who could afford to be choosy. But the tables have turned, and the timing couldn't be better.

Retail space is usually hard to find during the holiday season, especially for thin-margin discount stores. This year, however, is proving to be the exception to that rule as store closings by big name retailers such as Mervyn's LLC, Circuit City Inc., Ashley Furniture Industries Inc. and Shoe Pavilion Inc. flood the market with vacancies.

Suddenly rents are sinking to such levels that discount stores such as Dollar Tree and AutoZone Inc. will pay and landlords are signing them up.

"Discount retailers are the red-haired stepchild of retailers. They are the least desirable, the lowest on the choices from available tenants," said Jon Stansbury, a broker with Terranomics, the retail arm of NAI/BT Commercial. "Now, landlords are chasing those deals because they are sitting on empty space that could be vacant for another 18 to 24 months."

It's a sea change from the past decade, when retail followed rooftops as furniture, clothing and food stores set up shop near newly built housing subdivisions.

"In the past year, we've had very little vacancy. None. It's been an unbelievable market," said Jim Randolph, a veteran broker with Cornish & Carey Commercial in Santa Clara. "Now for the first time, we are going to have big-box vacancies spread out all over. These are national tenants, and they are suffering hard times."

During the good years, retail rents steadily increased until Silicon Valley centers and shopping malls commanded some of the highest rates in the country. Annual rents at choice locations ranged from $28 to $33 a square foot - completely out of bounds for discount retailers seeking $10 to $15 a square foot a year.

Now as rents decrease, discount retailers are taking notice. Doors, once closed, are being swung open by landlords eager to keep their centers from going dark.

AutoZone and the Dollar Tree have had stores in Campbell's San Tomas Plaza for a number of years for that very reason. Manager Peter Balbiani said initially he was opposed to their tenancy, but was persuaded to reconsider because he was having trouble filling his 121,000-square-foot center with higher-end stores.

"When we were first confronted, we didn't want them," Balbiani said. "But they asked us to look at their other stores in the area, and we could see they kept them very nice and very clean."

Both retailers have been good tenants. "They're a national tenant," he said. "I hope they stick around."

AutoZone is aggressively seeking out other locations.

"It's pedal to the metal," Stansbury said about the auto parts company based in Memphis, Tenn. "I represent them exclusively, and we're out making deals for the first time in many years."

Given the economic climate, it's easy to see why AutoZone would thrive.

"They're selling auto parts," he said. "They're the beneficiary of nobody buying new cars."

During a conference call on Sept. 22, William C. Rhodes III, chairman, president and CEO for AutoZone, said, "On the new-store front, we opened 185 stores and relocated 14, expanding our presence in markets across North America."

AutoZone reported the eighth consecutive quarter of double-digit growth, with sales that exceeded $6.5 billion. In a telling barometer that other retailers would envy, same-store sales were up slightly at 0.4 percent.

To illustrate how far rents have fallen, Stansbury said he's in the final stages of negotiating a lease for AutoZone at the one of San Jose's newest shopping centers, The Plant. Two years ago, the property owner wanted $4 a square foot. Today, he said, the rate is $2 a square foot.

That's 50 percent less and it's because landlords are interested in filling up the last 10 percent of the center- 50,000 or 60,000 square feet- which is very difficult, he said.

But not every discount store is lining up to sign on the bottom line.

Fernando Cuebas, a broker with Cornish & Carey in Pleasanton, said his client, 99 Cents Only, based in City of Commerce, is looking at sites but is in no rush to commit, because they do not think the retail market has hit bottom.

"They are like a lot of people looking at the market, they think the A-type sites will become competitive," Cuebas said.

Cuebas confirmed that when the market was hot, property managers didn't need to talk to discount retailers because they could fill their malls and centers with "sexier" stores.

"But now people are willing to speak with them," he said.

The question is will the discounters talk back. Cuebas said they are biding their time, adding "We think the market still has room to fall."

Many are waiting until after the Christmas-buying season, which is forecast to be a grim one for the retail sector, when even more stores are expected to close.

For the retailers knowing they may be headed for rough waters, brokers advise talking to landlords about renegotiating their rent.

"The smart ones right now who are above market rents are renegotiating," Stansbury said. "Some of the smart landlords who understand they are not crying wolf, are playing ball and giving shorter terms and rent reductions."

Otherwise, he said, the store will go dark and foot traffic, the lifeblood of every retailer, will only decline.

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