Puget Sound office vacancy rates continue to climb, rising a point and a half in the second quarter of this year, to 15.37 percent, CB Richard Ellis said in its latest market report issued Tuesday.

The main culprit for the increase is the downtown Seattle market, where the West 8th office added almost 500,000 square feet of vacant space, the firm said.

In South Lake Union, Merck and Co. Inc, formerly Rosetta Inpharmatics, vacated its space, giving back more than 130,000 square feet and helping downtown to its highest vacancy rate since 2004, CBRE said.

On the Eastside, CBRE said office vacancy rose half a percentage point, to 14.23 percent due to midsize tenants downsizing or going out of business.

In the Puget Sound region, more than 1.8 million square feet of office space was delivered in the second quarter, the most in one quarter since 2006, the firm said. Of that, about one-third was vacant.

Office rents in the region continued to fall, dropping more than a dollar, to $28.78 per square foot, per year, full service, CBRE said. During the last cycle, rents peaked at $31.71 per square foot and declined for three years while the market absorbed surplus space. This cycle, the peak was $31.28 per square foot in the fourth quarter of 2008.

In the region's industrial market, warehouse and distribution centers saw vacancy rise a little more than a half percentage point in the second quarter, to 7 percent, CBRE said.

Traffic at the ports of Tacoma and Seattle reflect lower demand for imports and exports, a major driver of the industrial market.

The Port of Seattle has seen 190,940 fewer TEUs (twenty-foot equivalent units) year-to-date, down 21.7 percent over this time last year, CBRE said. The Port of Tacoma has seen 140,981 fewer TEUs, down 15 percent.

CBRE said some industrial landlords are allowing “shrinking tenants” to stay on a short-term basis while they market the space.