Despite mass layoffs, business closures and waning tourism, Oahu's retail market is expected to remain intact through year's end, according to a new report by Colliers Monroe Friedlander Inc.

The local retail market outperformed many other industries, with 500,000 square feet filled by tenants in 2008 due to the opening of new developments, including Nordstrom at Ala Moana Center, Pearlridge Uptown II and the Avenue Shops at Safeway on Kapahulu.

However, the forecast is dim for 2009, with anticipated store closures and a significant boost in vacancy by the end of the year. Furthermore, retail projects that haven't secured financing will likely be shelved or placed for sale, the report said.

“;Next year will be an increasingly challenging environment for retailers,”; said Mike Hamasu, Colliers director of consulting and research. “;Based on the various economic forecasts for Hawaii, these reports don't hold out much hope for a speedy economic recovery.”;

Retailers are seeing a 6 percent to 20 percent year-over-year drop in sales for the holiday season, particularly for resort retailers, according to Retail Merchants of Hawaii President Carol Pregill.

“;That's the concern that there are fewer visitors and those that are coming aren't spending as much so we don't have the same slice of visitor pie that we used to,”; she said.

Resort retailers are projecting lower year-over-years sales, with volume expected to be down 10 percent and 30 percent, according to Colliers.

The retail market will transition into a no-growth period after the holidays, with vacancy rates anticipated to double next year, followed by a slump in asking rents.

Year-end vacancy fell slightly to 3.2 percent from 3.3 percent at year-end 2007. The lack of available space helped boost rental rates, which rose by 3.9 percent from a year ago, with the average asking base rent rising to $3.47 a square foot a month from $3.34 last year.

“;In order to continue to survive many of the retailers have implemented cost-cutting measures so they can stay afloat and many of them are waiting through the holiday season to determine what their financial status is,”; Hamasu said. “;If the holiday season isn't as successful as they anticipate, there's a high likelihood we're going to have a number of shops that are going to close.”;

For now, while many retailers pointed to increasing anxiety over the recession, a decline in sentiment has yet to be seen in vacancy rates and rents. However, consumer sentiment on a national level has fallen to record lows in the aftermath of national business failures with retailers such as Circuit City, Sharper Image and Steve & Barry's, which have all filed for bankruptcy.