The average asking rent for retail space on Oahu rose to a record $3.69 per square foot per month in the first quarter as retailers fought for prime real estate in growing neighborhood shopping centers.

Islandwide rents — excluding Waikiki and Ala Moana Center — over the past nine quarters were up 13.9 percent, according to the latest retail market report by Colliers International.

"We haven’t had rents this high, ever," said Mike Hamasu, Colliers director of consulting and research. "This phenomenon is even more pronounced in Waikiki where the average asking rents have risen by 38.5 percent (to $13.98 per square foot per month) during this time period. It is highly likely that by year-end 2015, a ‘ground zero’ location on Kalakaua Avenue would exceed the $40 (per square foot, per month), establishing a new record high for this trade area."

Rents have been escalating consistently since 2012, with Ala Moana Center’s average rent pegged at $16, he said.

"Because vacancy rates are so low at 4 percent, tenants are finding it much more difficult to find prime retail locations," Hamasu said. "There’s competition for that space, and as a result rents are rising."

In a normal market, retail vacancy is between 6 and 8 percent, he said.

Rent relief is not coming anytime soon, according to Colliers.

"The current market conditions will continue to fuel interest in retail development going forward," he said. "That’s the reason why retail developers are going to build, because the rents are going up."

Meanwhile, retail spending and job growth are fueling increased demand by consumers for goods and services, while developers move forward with more than 2 million square feet of new retail center space scheduled to open in 2016 and 2017, the report said.

The new development includes the $572 million expansion of Ala Moana Center, the $350 million redevelopment of the International Market Place in Waikiki and the $500 million Kapolei regional mall.

"That’s a huge amount of retail space that’s being planned over the next couple years," Hamasu said.

While market conditions are expected to remain steady for 2015, inflation has begun to affect a broad spectrum of goods and services, including hotel room pricing, construction costs, skilled-labor wages and even basic grocery items.

"Rising prices can place a dampening effect on economic growth," the report said.

Colliers anticipates that vacancy rates will drop within the range of 3.5 to 4 percent over the next few quarters, with rents projected to increase by 5 to 10 percent by year’s end.