The amount of vacant store space on O'ahu continues to shrink as the island's retail boom stretches into its third year, according to a new report.

Merchants filled 81,233 square feet of space this year through mid-May to send the retail vacancy rate down slightly to 3 percent, a low not seen in more than a decade, according to local commercial real estate firm Colliers Monroe Friedlander.

However, the pace at which retailers are absorbing space is slowing as availability becomes more limited.

Colliers said the reduction in available space has created more competition among retailers seeking to grow with the strong local economy.

Less available space also has enabled landlords to raise rents. Average net monthly asking rent for retail space per square foot rose from $2.85 to $2.91 over the past six months, according to the report. Since the end of 2003, asking rental rates have increased about 24 percent.

Mike Hamasu, research director at Colliers, also said higher construction costs and the extremely tight labor market are hampering expansion plans for some retailers.

"This supercharged retail environment ... may suffer from its own success," he said in the report.

The industry's absorption of 81,223 square feet was primarily from retailers opening stores at Kunia Shopping Center and Windward Mall, Colliers said. There also was significant retail growth in Wai'anae and the North Shore that helped offset increased vacancies in East O'ahu that included stores closing at Kahala Mall.

The absorption rate is about half what it was during the first half of last year, and also lower than 131,000 square feet filled in the first half of 2004. In 2003, vacant space increased.

Shopping center builders, however, are planning plenty of new retail space, mostly in the Kapolei area. Colliers said developers are soliciting tenant commitments to fill 1 million square feet of retail space to be built.

More store space would help provide room for numerous retailers seeking to expand, including national chains Target, Walgreens and Cost Plus World Market.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.