U.S. office rents fell in 2010 to $25.62 a square foot from $26.84 the prior year, but will increase this year, Bloomberg reported.

The growth, which will be “modest and limited to key markets” in 2011, will begin to accelerate next year, according to CB Richard Ellis Group Inc.

A report this week by the world’s largest commercial real estate firm said rents in San Francisco will likely lead the recovery, with an average annual increase of at least 9 percent during the next two year. In New York, rents are expected to increase at an annual rate of more than 7 percent. Phoenix and Orange County, Calif., are only expected to see annual rate hikes of about 4 percent.

“The pieces are in place” said Art Jones, senior economist for CBRE Econometric Advisors. “Once hiring picks up, the market’s in a good position to capitalize and recover.”

The U.S. office vacancy rate fell to 16.4 percent in the fourth quarter. The firm expects office rents to rise to $26.08 in 2011.