Retail store expansions at O'ahu shopping centers this year slowed to their lowest level in four years, though demand remains relatively strong for limited available space, according to a recent survey.

Retailers on O'ahu filled 53,280 square feet of vacant store space this year on a net basis, according to local commercial real estate firm Colliers Monroe Friedlander.

The net absorption, or result after all retailer openings and closings, represented one-third of the space filled last year (166,435 square feet) and was the second straight year of slower absorption after the recent peak of 300,856 square feet filled in 2005.

Some store closures such as 99 Ranch Market at Moanalua Ethnic Village and Star Market at Kahala Mall added to vacant space this year as Hawai'i's economy cooled.

But Mike Hamasu, consulting and research director for Colliers, said limited supply of available space was largely responsible for the slowing industry growth at a time when many retailers want to expand in the local market.

Hamasu said developers are building or planning to build more than 3.1 million square feet of new retail space, including expansions to Ala Moana Center and Ward Centers in Honolulu and new regional malls Kapolei Commons and Ka Makana Ali'i in the 'Ewa-Kapolei region.

Next year's retail real estate market is expected to be similar to this year's with limited supply that's pushed rents higher because two large projects — Kapolei Commons and Ka Makana — won't be finished for a year or more.

"Until those planned projects come to fruition, retailers will find it increasingly difficult to locate appropriate retail space," Colliers said.

The average monthly rent (including maintenance fees, taxes and insurance) being asked by shopping center owners outside premium spots of Waikiki and Ala Moana Center is $3.31 per square foot, up from about $3.20 at the end of last year.

O'ahu has 11.15 million square feet of tenant space at shopping complexes. Of the total, 371,249 square feet is vacant, or 3.33 percent of the inventory.

Though retailers filled more space than they emptied, this year's vacancy rate was up from 2.18 percent last year because roughly 170,000 square feet of new retail space was added to the market and not all of it was occupied upon completion.

Much of the space that was filled this year was in Waikiki. The Royal Hawaiian Shopping Center, which had been largely vacant during a renovation, was nearly completed this year. Waikiki Beach Walk and a complex that replaced the former Waikiki III movie theater also added to retail store growth.

Colliers said 156,928 square feet of empty space in Waikiki was filled during the year. Leeward O'ahu, the North Shore and Wai'anae also added to net absorption.

Some large retail spaces that are expected to become vacant, at least temporarily, next year are two CompUSA stores in Kaka'ako and Pearl Highlands Center slated for closure.

But other companies plan to expand, including a 24,000-square-foot Steve & Barry's discount apparel store at Waikele Center, Whole Foods at the former Kahala Star Market space and an 11,000-square-foot store by the largely organic Japanese food retailer Nijiya Market at Puck's Alley.

"For 2008, absorption should continue to remain limited as tight market conditions are likely to persist," Colliers said in its report.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.

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