The vacancy rate rose and rents softened in O'ahu's office market in the third quarter, reflecting continuing weakness in the local economy, according to a report released by CB Richard Ellis.

The vacancy rate was 10.3 percent at the end of September, up from 10.1 percent at the end of June and 8.6 percent at the end of last year, the commercial real estate firm is reporting.

The vacancy rate would have been higher if not for renovations at the 930,000-square-foot Prince Kuhio Federal Building downtown that resulted in the government going into the private market to lease space. The renovations are part of the federal stimulus package.

CB Richard Ellis said the amount of unoccupied office space grew by 20,000 square feet in the third quarter and "that trend is expected to continue for several more quarters."

The central business district experienced "positive absorption" in the third quarter, meaning the amount of available office space shrank.

The outlying areas, however, experienced "negative absorption," the report said.

The average gross asking rent fell to $2.89 per square foot in the third quarter, down 5 cents so far this year.

"The asking rents are softening as increasingly nervous landlords are not only trying to encourage new tenants, but keep the current ones as well, according to the report.

Operating expenses have become a larger part of the total rent a tenant pays, according to the report.

This has put pressure on landlords to control expenses by offsetting increases in operating costs with other cuts within their control.

"This has created a situation where there is a very real possibility of cuts in building services soon," the report said.