Despite uncertainty in the economy, vacancy in Hawaii's retail centers climbed slightly to 2.8 percent in the third quarter, but is expected to rise further in the wake of the current financial crisis, according to the latest report released yesterday by CB Richard Ellis Inc.

The vacancy rate compares to 2 percent at the beginning of the year, an increase of 64,000 square feet of space in the market.

Subprime lending troubles coupled with rising gas prices and lower consumer spending is affecting retail investments in Hawaii, while news from Wall Street has created a perception of bargain prices from distressed sellers.

However, local sellers do not appear to be distressed yet and expect to sell their shopping centers at prices relative to the income produced and the tight market conditions statewide, the report said.

“;We haven't quite weathered the storm yet, it's still going to get worse, but there is still retail development going on and people are still shopping as normal in Hawaii,”; said Jeffrey Hall, CBRE's senior director of research.

Local weighted average asking rates are softening, though “;there is not room for either landlords or tenants to be able to adjust their already very tight budgets much more,”; according to the report.

Average asking rates in retail centers was $3.57 in the quarter, down from $3.75 in the year-earlier period.

“;This is expected to be the trend until the economy has stabilized and tourism numbers have improved,”; the report said.