Average asking rents have dropped and the vacancy rate for Oahu's industrial market has risen to 4.42 percent, a level not seen since 2001 when the island was reeling from the aftermath of 9/11, according to the year-end report from Colliers Monroe Friedlander.

The industrial market posted more than 550,000 in negative absorption for the year, the report said. Colliers attributed the vacant space to the delivery of several new condominium products, including: Kapolei Spectrum, Waipio Business Center and Kapolei Kai.

After seven previous years of rate growth, average asking rents dropped by 5.34 percent for the year. The average asking rent fell to $1.24 a square foot each month from the record $1.31 a square foot each month that was posted at year-end 2007.

  Honolulu has been less severely impacted than the rest of the country. Of the 58 markets tracked by the firm, only four including Honolulu had vacancy rates below 5 percent.

The current economic slowdown is affecting sales for the wholesale distribution and construction industries, the largest components of Honolulu's warehouse market, Colliers said. A decline, the first since 2002, in shipping volumes at Honolulu Harbor has contributed to a reduction in sales. And, the turmoil of Wall Street has compounded the difficulty in getting projects built, the report said.

There will be a shortage of urban industrial warehouse space for rent especially for areas such as Kakaako, Kalihi/Sand Island and Airport/Mapunapuna, the report said.