The best-performing real estate investment trusts this year will be owners of office and industrial properties, as occupancies improve and landlords raise rents, a JPMorgan Chase & Co. (JPM) analyst said.

Commercial real estate has “turned the corner,” helping REITs improve earnings and have “robust dividend growth,” Anthony Paolone said today in an interview on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

Demand for industrial and office space is improving as the U.S. economy expands and hiring picks up. The vacancy rate for industrial properties fell to 10 percent at the end of 2011 from 10.8 percent a year earlier, according to Cushman & Wakefield Inc. New York and Washington had the lowest office vacancy rates in the fourth quarter, the commercial-property brokerage said.

Companies such as SL Green Realty Corp. (SLG), the biggest owner of Manhattan skyscrapers, and Prologis Inc. (PLD), the world’s largest warehouse landlord, are the “best buys” among REIT stocks, he said.

“Occupancy is moving higher and rent rolls are starting to move,” Paolone said. “There is some leverage for an economic recovery.”

To contact the reporters on this story: Christine Harvey in New York at charvey32@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net

To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net