. . . the community is not big enough to support such a school.
You've done the research and made this determination already.
1. I would suggest finding another community if you really want to start a full time school.
2. Find cheaper digs! I certainly hope the rate you quoted is per annum! Still, that's a lot of money!
3. Look for someone else that has space that is used only part time. If you can get a small room that you lock and control, the larger space only has to be available during your class times. Private schools, perhaps, dance studios. You might even talk to the local 'real estate' maven to find out if there are properties that aren't being used that you could run in cheap between tenants. Something is better than nothing and much of what you need can be moved in and out quickly.
4. Second floor digs are going to be cheaper than first floor!
5. Check out the local church! You might be surprised!
Respectfully
Mark W. Swarthout, Shodan