New York’s commercial real estate market may see a decline in sales and fewer bidders for properties in the face of more stringent credit requirements, Cushman & Wakefield said.

Prices are more likely to remain “stable” than fall and institutional investors will probably replace private investors who used high levels of debt for purchases, New York-based Cushman said yesterday. The company is the largest closely-held commercial broker. “The most likely result of the change in credit conditions will be a slowdown in overall commercial real estate investment activity from historic highs,” Mr. Cushman said. “These changes could lead to fewer properties trading hands, fewer bidders for each available property and ultimately a reduction in values stemming from the rising cost of capital and an increase in perceived risk.”

Manhattan office sales are coming off “the strongest six months ever recorded,” Mr. Cushman said. About $34.1 billion was spent buying skyscrapers through June, compared with $34.7 billion for all of 2006, the report said. Those deals include Macklowe Properties Inc.’s $6.7 billion acquisition of seven buildings formerly owned by Equity Office Properties Trust.

Rising defaults among subprime borrowers have cut demand for securities backed by such mortgages and curtailed the availability of credit, making some loans more expensive. Analysts have projected a decline of as much as 15% in property values nationwide over the next year.

Even with the credit crunch, the Manhattan office market “remains fundamentally strong” because of high employment levels, low vacancy rates, and record rental growth, Mr. Cushman said.

Demand for office rentals should slip only slightly as only 7.3 million square feet of new supply will be added to a 398 million square-foot market in the next three years, the company said.

These “strong fundamentals” will drive institutional investors, such as pension funds and real estate investment trusts, to bid for properties, keeping prices from falling too sharply, according to the report.

“As long as overall employment remains healthy in Manhattan, asset values are expected to remain stable,” the report said.

Any decline in rents for top-quality offices would most likely be reversed once credit markets rebound, Mr. Cushman said. Rents averaged $69.58 a square-foot in June, up 38% from a year ago, and are at a record high.