U.S. office vacancies rise as recession bites

BOSTON (Reuters) - U.S. office vacancies spiked higher in the fourth quarter and rents fell as the recession took a heavy toll on the commercial property market, according to data released on Tuesday.

Real estate research firm Reis Inc said there is no end in sight to the property downturn and forecast rising vacancy rates into 2010.

Rents fell 1.2 percent in the quarter, the sharpest drop since 2003, with the decline particularly pronounced in the New York metropolitan area, which has lost tens of thousands of jobs in the ailing financial sector.

The national vacancy rate rose to 14.4 percent, up 0.7 percentage point in the quarter and well above the 12.5 percent low hit in the third quarter of 2007.

Pittsburgh bucked the trend, recording a rise in rent as the western Pennsylvania city benefited from diversifying its economy away from manufacturing.

The value of U.S. office real estate investment trusts has fallen by about half over the past year, as measured by the Dow Jones U.S. industrial and office real estate investment trust index. Big office owners Vornado Realty Trust and Boston Properties Inc are among those feeling the pressure in their shares.

(Reporting by Scott Malone; Editing by Steve Orlofsky)