O'ahu's retail industry grew this year, but at a slower pace than the previous two years because available store space is scarcer than it's been for nearly two decades, according to a new report.

Expansion-minded merchants have struggled with rising rents and diminishing space for the past few years, and the trend this year continues to challenge retailers, according to the report by local commercial real estate firm Colliers Monroe Friedlander.

Average net asking rents rose to $3.02 per square foot, up from $2.85 per square foot last year, though the calculations exclude Waikiki and Ala Moana Center, where rents can be much more.

The other difficulty has been available real estate. There is about 239,000 square feet of vacant retail space at shopping complexes ranging from neighborhood centers to regional malls on the island.

The empty space is the rough equivalent of half of Kahala Mall, and represents 2.18 percent of all leasable retail space on O'ahu.

Mike Hamasu, Colliers research and consulting director, said vacancies haven't been that low in the 10 years Colliers has measured the market, and likely haven't been lower since the late 1980s.

"New supply is limited," he said. "If you're a retailer ... you're going to have difficulty finding space."

Pushing vacancies lower were local and national retailers searching to open new stores amid Hawai'i's steadily growing economy. Retailers filled 166,435 square feet of available space this year, Colliers said.

The expansion was about half that of last year, when retailers filled 300,856 square feet of space, and also below the 228,834 square feet filled in 2004.

"This slowing in the pace of absorption is directly correlated to the lack of available space in the marketplace and not a reflection of a softening marketplace," the report said.

"Demand remains strong for prime retail space as an increasing field of national retail tenants and strong regional firms are actively looking to establish a presence or to expand their existing sites in Hawai'i," Colliers said.

Among merchants expanding this year were Borders, Price Busters, Taco Del Mar, MAC cosmetics and a host of others. Most of the space filled, about 120,000 of the 166,435 square feet, was at Windward Mall and Pearlridge Center.

There are a few major retail centers under construction or planned that should increase options for stores and restaurants in the next few years, though some projects have been canceled in part because of high construction costs and rising land values that encourage developers to sell property instead of building on it.

The newest retail complex coming online is Waikiki Beach Walk, an Outrigger Enterprises project on Lewers Street that starts opening this month. Planned projects include Pearl City Gateway Shops next to Wal-Mart, and regional malls Kapolei Commons and one planned in 'Ewa on Department of Hawaiian Home Lands property.

Others that have not moved forward include Laulani Village, a project in 'Ewa Beach where the developer is trying to sell the property, and a site envisioned for a 147,000-square-foot retail center in Kapolei between Home Depot and Kmart that is also on the market.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.