(Bloomberg) — Deals for a piece of New York’s iconic skyline aredrying up.

About $14 billion of commercial real estate changed hands in thebiggest U.S. property market in the first three months of the year,the lowest tally since the third quarter of 2014, data from Cushman& Wakefield Inc. show. Sales of office towers, hotels, storesand other buildings are forecast to drop as much as 30% this yearin Manhattan and the surrounding boroughs after a record $75.5billion of deals in 2015, according to the brokerage.

Evidence is piling up that six years of record-shattering pricegrowth for U.S. commercial real estate is hitting a wall. Buyersand sellers in Manhattan, a magnet for property investors fromaround the world, are sitting out deals as the slump in oil prices,China’s slowing economy, an uptick in borrowing costs and avolatile stock market give landlords pause.

“When you’ve had a pretty steady ascent for several years, it’slogical that investors look over their shoulders for a reason or asign that the music might stop,” said Doug Harmon, a seniormanaging director at Eastdil Secured LLC, a real estate investmentbank and brokerage owned by Wells Fargo & Co. “In January, itfelt like a game of musical chairs. Even the mostsophisticated investors weren’t sure if the music had just skippedor stopped, and others were scrambling for a chair to sit in.”

Nationwide, commercial real estate values fell in February,marking the second consecutive month of declines following asix-year streak of uninterrupted increases, according to an indexby Moody’s Investors Service and Real Capital Analytics Inc. Thedecreases are small — less than 1% each — but mark achanging tide for property owners who’ve ridden a wave ofdouble-digit returns since 2010.

“The market is cyclical,” said Robert Knakal, chairman of NewYork investment sales at Cushman, which tracks commercial-propertytransactions in all of the city’s boroughs except Staten Island.“It can’t keep going up.”

Prices for centrally located office buildings in big cities— one of the segments that jumped the most since the financialcrisis — now have the biggest declines. They have slumped 5.2%since December after surging 56% past the record set duringthe last decade’s boom, according to Moody’s and RealCapital.

‘Manhattan reverberates’

New York accounts for about 40% of major-market office dealstracked by the index, according to Jim Costello, a senior vicepresident at Real Capital. A slowdown in Manhattan is driving theslump in U.S. office pricing, he said.

“Anything that happens in Manhattan reverberates,” Costellosaid.

Building sales in New York are being stymied in part by thebreakdown of the market for commercial-mortgage bonds. Wall Streetfirms are pulling back from writing new property loans to be soldas securities after demand for the debt dried up at the end of2015.

The CMBS-market slowdown is pushing up borrowing costs, makingit harder to finance transactions. That is especially true fordeals too big for banks and insurance companies to underwrite ontheir own, according to Costello.

“That type of debt is important for very large transactions,” hesaid. “Manhattan is an expensive place. Every deal is hundreds ofmillions of dollars.”

Securitized debt

The biggest office deal of 2015 was financed in the bond market. SLGreen Realty Corp.’s $2.29 billion acquisition of 11 MadisonAvenue, the 2.3 million-square-foot (213,700-square-meter) toweroverlooking Madison Square Park in the Flatiron district, wasfunded with about $1 billion of debt. Deutsche Bank AG, MorganStanley and Wells Fargo sliced the mortgage into securities andsold the bonds to investors in September, according to datacompiled by Bloomberg.

Deals are still getting done, albeit not at the blistering paceof the past two years. Earlier this month, Shorenstein PropertiesLLC sold a 614,000-square-foot office building at 850 Third Ave. inMidtown to a partnership of MHP Real Estate Services and Chineseconglomerate HNA Group Co.

While returns on property investments are moderating, the U.S.property cycle hasn’t peaked yet, said Jon Gray, head of the realestate group at Blackstone Group LP, the world’s largest privateequity property investor and the top buyer of buildings inManhattan last year.

“We recognize there’s been a moderation in growth and value, butthe good news is the real estate investment world is still a verybig place,” Gray said Wednesday in an interview at a conferencesponsored by New York University’s Schack Institute of Real Estate.“The fundamentals are still pretty good and we’re still managing tofind opportunities.”

Haven sought

A wave of cash from foreign investors seeking a haven has been apowerful force behind the surge in Manhattan property values andisn’t likely to abate, according to Real Capital’s Costello. Therelative stability of the U.S. will continue to be a draw even assome of the biggest buyers in recent years struggle with economicuncertainty at home and the repercussions of low oil prices, hesaid.

Cushman is currently working with 32 Chinese buyers that don’tyet own real estate in Manhattan and are looking for New Yorkproperty, Knakal said.

New realities

It may take several months for property owners to come to termswith the market’s new realities, Knakal said. When bids in comelower than expected, many landlords simply refuse to sell, hesaid.

“Sellers aren’t capitulating,” Knakal said. “Volume drops beforepricing drops.”

Eastdil’s Harmon said there are several large deals in theworks. In 2015, Harmon shepherded such blockbuster transactions asthe record $5.45 billion sale of Stuyvesant Town-Peter CooperVillage to Blackstone and the $2 billion purchase of the WaldorfAstoria hotel by Beijing-based Anbang Insurance Group Co. While itmay take a little longer to get deals done than it did a year ago,values for the best properties in Manhattan haven’t taken much of ahit, he said.

“Pricing is slightly off the peak in certain circumstances,” hesaid. “But those prices are still sensational.”

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