I had a customer request to hide a row conditionally, but when the report rendered in the browser the hidden row still took up spacing on the report.

I found this post thanks to Frank v.d. Laar:

http://www.sqldev.org/sql-server-reporting-services/hidden-rows-still-displayed-9660.shtml

Try to set the Hidden property of the Static Row Group under the Details Group, in this case the whole row will disappear instead of the content of the textboxes.

If you are using Report Builder, you need to switch to Advanced Mode (make sure that the Properties and the Grouping windows are displayed, go to the upper right side of the Grouping window and press the black triangle), click on the second "Static" item under the "(Details)" group and you can set the Hidden property on the Properties window.