Small neighborhood retailers don't have a lot of options in Hawai'i's hot real-estate market if they need to find a new location fronting a high-traffic street in urban Honolulu — especially on Kapi'olani Boulevard.

Rents are higher, and available space is scarce for mom-and-pop store owners on the move.

Real-estate brokers expect that pressure to move out will build on small retail business owners as developers of luxury condominiums, retail powerhouses, high-end automobile dealerships and even self-storage facilities gobble up space on Kapi'olani.

"I think they're all being displaced," said local retail consultant Stephany Sofos.

"All this property is being redeveloped."

Mike Hamasu, research and consulting director for Honolulu real-estate firm Colliers Monroe Friedlander, said several high-end condo towers under construction will create more demand for higher-value retailers along Kapi'olani, while rising rents will encourage landlords to redevelop their property for upgraded use.

Nordstrom, planned for construction on Kapi'olani next to Ala Moana Center, is just the latest reflection of the transition.

"Those tenants making way for Nordstrom will find it very difficult to find similarly located retail space along this busy traffic corridor," he said.

The transition has been a slow one riding the state's economic cycles, and has seen average car dealerships, warehouses and neighborhood retailers make way for the Hawai'i Convention Center, fancy stone-clad office towers, Wal-mart, Sam's Club, and luxury car dealerships.

Some real-estate investors during the 1980s and early 1990s envisioned Kapi'olani becoming Hawai'i's version of Rodeo Drive with high-end boutiques.

That didn't come to pass, but real-estate development is enjoying one of its biggest booms on the wide, tree-lined street.

Planned or under construction are five condo towers, a Public Storage facility, Inspiration Furniture showroom and a three-story Wedding Ring Shop featuring a two-story glass-wall lobby, jewelry showroom, beverage bar, manufacturing station and rooftop lanai.

"It's not the Rodeo Drive with the boutiques, but it's become a power drive with big retailers," Sofos said.

"Is there any hope for the small guys? Nah, I don't think so. It's too valuable of a property."

Hamasu expects the development boom to add residents and new businesses that, in turn, will attract more development and continue the transformation of much of the area's small business character, which includes a host of strip clubs, hole-in-the-wall restaurants and beauty salons and shops selling everything from vacuums to golf clubs.

Rising rents are also expected to make it more attractive for landowners to redevelop their property for higher use, which also makes it harder for lower-end shops like the ones being displaced by Nordstrom.

Finding available retail space on O'ahu is the toughest it's been in eight years, with just 4.5 percent of all retail space on the island available for rent, according to Hamasu. In the late '90s, O'ahu retail vacancy was around 10 percent.

In the vicinity of Kapi'olani, Ke'eaumoku and Kaheka streets, Hamasu estimates that the retail vacancy rate is less than 2 percent, with most of the available space along Ke'eaumoku, or further mauka on King Street.

Rental rates, after falling for six years, have been rising since late last year and at midyear reached an average $2.59 per square foot a month, compared with $2.35 per square foot a year earlier.

Hamasu said landlords are asking $4 or more per square foot a month on Kapi'olani.

Jeffrey Hall, senior research director for commercial real-estate firm CB Richard Ellis Hawaii Inc., figures that most tenants making way for Nordstrom probably enjoyed below-market rent because of the uncertainty of how much longer they would be able to stay.

That only makes it harder to find comparable space, especially if a business relies on local clientele for customers.

"It will be difficult to find another freestanding, non-anchored project close by," he said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.