Grafton Street's 300-year anniversary has been marred by a lack of investment transactions, a well-publicised rejection from preppy American retailer Abercrombie & Fitch, and complaints about its plethora of fast-food outlets and mobile phone stores. But recent leasehold deals with international retailers may ensure Dublin's main shopping street will end a calamitous year on a high note, property agents say.

The thoroughfare took a series of knocks earlier this year when it emerged that Abercrombie surveyed the former Habitat store on College Green as a possible location for its first foray into the Irish market and deemed adjoining Grafton Street as too downmarket because of an "unattractive mix of shops". Despite speculation that discount retailer Lidl was considering taking on the Habitat lease, the keys were handed back to the owner and the high profile building remains unoccupied.

The street's property faced a further setback when developer Bernard McNamara was compelled last month to abandon the sale of the Richard Alan clothing store and the Zerep shoe shop after failing to secure a satisfactory offer for the buildings. The properties had been quietly placed on the market in April for a combined price tag of Euro 42m.

However, property advisers argue that Grafton Street will ride out the country's worst commercial property market in decades, thanks to the signing of new retailers such as American Apparel and the addition of Zara and H&M, the anchor tenants at Joe O'Reilly's Gaiety Centre, which opens on nearby South King Street in less than three weeks.

"There hasn't been any evidence of a downward shift in rents on Grafton Street and overseas retailers are still taking space," said Joan Henry, head of the research at Savills Hamilton Osborne King. "But until liquidity comes back into the market and prospective buyers can borrow money, you won't see much investment activity."

Grafton Street may this year retain its position as the sixth most expensive street in the world, in terms of rent per square foot, if the current demand from international retailers for large stores holds up.

The Nine West leasehold interest last month commanded a premium of Euro 650,000. Media reports suggest Aldo, a Canadian shoe and accessories store, has taken on the lease, agreeing to a 77% increase in the rent from a previous charge of Euro 359,500 a year. Aiden McDonnell, the Colliers Jackson-Stops associate director who negotiated the deal, declined to say which retailer will occupy the store. Aldo, which runs a store in Blanchardstown, is a privately held company based in Montreal.

The deal means that the new occupier will be paying an average of 880 sq ft for prime zone A space, compared with between 850 sq ft and 900 sq ft, on average, for similar retail space on the street as a whole, Savills estimated. Prime rents are little changed from last year, the agents say.

While the staggering rise in rental values on Grafton Street over the last decade has deterred local traders from setting up shop or forced them to move to peripheral streets, a slew of foreign clothing chains still seem prepared to stump up the rent.

Tommy Hilfiger agreed to pay a rent of about Euro 1.6m for a new store that's opening soon in the former Golden Discs outlet.

Swatch, the watch maker, recently open its first Irish outlet in the former Vodafone store. The Swiss brand is paying its owner, the ESB pension fund, a passing rent of Euro 243,000 for the 377sq ft property at 55 Grafton Street.

American Apparel has agreed to lease a building being remodelled at 114 Grafton Street, near the main entrance to Trinity College, for a reported Euro 1m a year. Irish Life Investment Managers is spending an estimated Euro 4m on the building's revamp.

Property agents' websites indicate that about four leases are still for sale on the street, including that for Warehouse, which is moving to the Gaiety Centre. Colliers Jackson Stops is looking for at least Euro 400,000 a year for the old Warehouse lease.

O'Reilly's Gaiety Centre, a Euro 105m six-storey block just off Grafton Street, was not due to open until next spring but will now open next month so that Zara and H&M can benefit from pre-Christmas trade.

The addition of the fashion chains could draw shoppers to the Grafton Street area who previously shopped in their stores on Henry Street.

"South King Street was designed to be an extension of Grafton Street, along with Oasis and Topshop on the other side, and it will create greater footfall," said Keith Ruane from Colliers. "It is an untested retail market but the Luas (light rail) stop nearby is a big help for its catchment area. Even in tough economic times, Grafton Street will do well."

Even if rental values hold up for the rest of the year, investment activity in the Grafton Street area has come to a standstill, agents complain.

That's because the lack of bank funding available has pushed the value of investment transactions in the domestic market as a whole down to Euro 465m in the first nine months of this year, compared with Euro 1.6 billion for the same period in 2007, CB Richard Ellis figures show.

Dominant property owners in and around Grafton Street include McNamara, who bought a portfolio of buildings including the Richard Alan and Zerep outlets in an off-market transaction about two years ago, as well as Treasury Holdings, and the Irish Property Unit Trust, owner of the Nine West store.

In addition to investors' reluctance to put property on the market, on Grafton Street or anywhere else, choice for overseas retailers seeking a site in the prime area is also limited by a dearth of stores large enough to accommodate their needs.

"These retailers still see Grafton Street as a prime pitch but there is a shortage of stores with floor plates big enough for them and when these leases do become available, they command a premium," Ruane said.

While modern retailer demands will be met on the northside of Dublin by the proposed Arnotts and Carlton redevelopments and are comfortably accommodated by suburban shopping centres such as Dundrum Town Centre, retailers often have to rely on redevelopments on the south side of the city to get the space they need, according to Rod Nowlan of Bannon Commercial Property Consultants.

"The reason you're seeing so many kiosk-style units, pharmacies and convenience stores on Grafton Street is because they have only floor plates of between 1,000 and 2,000 sq ft," said Nowlan.

"There's little doubt the street needs an improved tenant mix. It's likely that the change in the economic climate will mean investors will assemble sites along the street to create stores with better floor plates that are more appropriate."