SAN FRANCISCO — The worst isn't over for commercial real estate in high-tech hot spots.

Rents continue to tumble and vacancies soar more than two years after the dot-com implosion, underscoring the tech industry's deepest slump.

The commercial real estate market will remain soft the next 12 to 18 months as companies shed more workers and scramble to sell or sublease excess property, real estate experts say.

'It's a gradual, gradual state of erosion,' says Michael Silver, CEO of corporate real estate services firm Equis. He says tech strongholds — still reeling from a major construction buildup during the dot-com frenzy — won't recover until late 2004.

Some areas are suffering more than others, including San Francisco, the Silicon Valley and Denver. As a result, cost-conscious companies are:

·Delaying construction. Cisco Systems indefinitely postponed construction of a sprawling campus in south San Jose, Calif. It has downsized the project, to a range of 1 million to 3 million square feet from about 6.6 million square feet. The campus — which was to be occupied in mid-2002 — will house 3,000 to 9,000 workers instead of 20,000.

·Cutting back. Hewlett-Packard is shedding 19% of 75 million square feet of office space worldwide as part of a $200 million cost-cutting program. The company, which is in the process of laying off 16,800 employees following its $19 billion merger with Compaq Computer, has put three buildings on the market and is closing other facilities.

Xerox has started a nationwide program where salespeople at leased facilities of less than 15,000 square feet telecommute.

·Selling property. Sun Microsystems recently sold a 250,000-square-foot building complex in Palo Alto in Silicon Valley for an undisclosed amount and is subleasing property in Silicon Valley. The company, which announced 4,400 job cuts this month, is in the midst of a two-year plan to consolidate or eliminate leased property worldwide.

Some real estate experts, noting a slowdown in the real estate market's decline, say there is hope.

'We've almost reached bottom for rent price declines and vacancy increases,' says Maria Sicola, national research director for real estate firm Cushman & Wakefield. 'The question is: When will demand return?'

Not until companies start hiring — probably next year — analysts say. More than 330,000 tech and telecom jobs have been slashed this year, says outplacement firm Challenger Gray and Christmas.