Ask HN: Free office space. Premature scaling? Too good to be true?

I'm in the web design/development business (the amount of unqualified freelancers and "businesses out there doing this makes me embarrassed to admit that I'm in that industry here on HN but for the sake of discussion let's assume I'm great at what I do). The first client was free, number 2 was a $400 job and now it's not uncommon to ask for $4,000. That's 10 times the income. As it stands I work from home so my only overhead is my phone line, Internet connection, and any equipment and software I may need from time to time plus web hosting.

There's a guy in town offering "free rent for good ideas". I called and he's looking for viable businesses to take the space for free. The idea is that since this economy is so crappy he's willing to help people out by giving them the space free for as many months as he believes they need to turn enough profit to pay rent. After the free period, the rent would incrementally increase until it reaches a maximum of $1500/month.

After speaking with me he thinks I may be right to take the space but I'm wary. I can do fine without an office and don't think I absolutely need it but at the same time I feel that having a public store front increases credibility, visibility, professionalism, and that there's the possibility that having the office would boost my profits to a point where I can actually afford it when it's time to pay rent.

Is this magical thinking? Has anyone heard of others offering something similar? Do you think it makes sense to take the offer?

The guy also mentioned that we can partition the office in half and share it with a computer repair shop or cell phone retail store.