Downtown Manhattan office rents are hitting new highs, and that is great news for Brookfield Properties ( BPO), one of the largest owners in the market.

The spiking rents won't immediately boost earnings much, since Brookfield has few leases turning over next year. Nonetheless, the resurgence of downtown Manhattan from the gloom of the World Trade Center terrorist attacks significantly increases the value of Brookfield's properties in the market.

About half of Brookfield's national office portfolio profits come from New York City, while good chunks also come from Washington, D.C., and major cities in Canada. The Trizec purchase provides the company with a significant Los Angeles presence.

Asking rents are currently above $60 per square foot at Brookfield's downtown Manhattan properties, which include the four-tower World Financial Center, One Liberty Plaza and One New York Plaza (purchased from Trizec), says David Cheikin, the company's downtown office leasing broker.

Downtown market rents were $30 per square foot in the third quarter of 2006, according to Brookfield's last earnings report.

"The majority of the resurgence is midtown to downtown," says Frank Cento, a leasing broker with Cushman & Wakefield, who adds that a wide variety of financial services and law firms are returning downtown as space availability grows scarcer in midtown.

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