But according to a new report by local commercial real estate firm Colliers Monroe Friedlander, new space won't be built fast enough to ease rising rents and falling inventory next year.

The situation has been troubling for some growing businesses that are facing higher costs for storage space that is increasingly hard to find.

"Tenants, when they see something they like, are jumping," said local industrial real estate broker Mark Ambard of Ambard & Co. "There's pressure on them."

Mike Hamasu, research and consulting director at Colliers, said in the report that booming construction, particularly development work in Kaka'ako and Manana contributed to a 200,000-square-foot reduction in available warehouse space on O'ahu this year.

Vacancies dropped from an already low 3.59 percent at the end of last year to 2.69 percent, and the average monthly per-square-foot asking rent rose by 36 percent, from 67 cents to 91 cents during the same period, Colliers reported.

"O'ahu continues to be a landlord's market with limited available warehouse space," Hamasu said in the report, adding that landlords are placing premiums on warehouses of less than 4,000 square feet.

The rising rent and falling inventory has reached a point where developers are planning to build warehouse space — something not seen in more than a decade, Ambard and Hamasu said.

Armstrong Builders Ltd. bought two lots at Mill Town Center business and industrial park recently with plans to build a roughly 15,000-square-foot warehouse to be divided into spaces between 2,000 and 2,600 square feet.

Armstrong Builders President Bob Armstrong said rising rents, lack of quality small warehouse space and billions of dollars in upcoming military construction projects made it the right time for the project.

Other projects are in the works at Campbell Industrial Park and Halawa, Ambard said.

In past years, new warehouse construction other than for an owner/user was near impossible to justify given high land values and low rents. Ambard said per-square-foot rent in 1992 fell from about $1 to 75 cents per square foot and did not show signs of rising significantly until last year.

Despite the new construction, Colliers predicted demand will outstrip supply next year, resulting in the vacancy rate dropping from 2.69 percent to 2.21 percent as another 110,000 square feet of warehouse space is occupied.