Ghost Towers to Playground Cities: Navigating the New US Office Market

For decades, the gleaming office towers of major American cities were a prized asset for Islamic investors. Pre-COVID, a Manhattan skyscraper was a hallmark of a sophisticated global portfolio. Five years on, the landscape is irrevocably altered.

This is the turning point. While the US office vacancy rate is at a record high of 20%, for the first time in 25 years, the total US office stock is shrinking. Demolitions and conversions now outpace new construction. This is a fundamental re-evaluation of the office’s role in a world of permanent hybrid work.

This shift gives rise to a new urban philosophy rejecting monofunctional business districts. As Carlo Ratti of the MIT Menseable City Lab notes, we now go to the office “not just to work, but to connect.” This “office-as-play” concept reimagines the workplace as an “ecosystem of encounter.” Employees now demand more from both their building and its neighbourhood, seeking a vibrant local area with restaurants, galleries, parks and more.

Chicago’s Fulton Market district is a prime example. I recently witnessed its vibrancy first-hand. Once the meatpacking district, its transformation was catalysed by Google’s arrival in 2015. Today, it is a dynamic, mixed-use neighbourhood. It’s not just tech firms; law firms and consultancies are moving in, seeking a more engaging environment for their teams than the traditional Loop.

The success of areas like Fulton Market illustrates a crucial trend of flight to quality. However, quality is no longer defined simply by a prestigious address. It is defined by the experience. To attract and retain tenants in this new era, property owners must offer a high leel of amenities akin to a luxury hotel. This includes state-of-the-art fitness centres, wellness rooms, inviting outdoor terraces, and seamless hospitality services. The building must be a destination, not just a place to plug in a laptop.

For Islamic investors, the old playbook is obsolete. The following considerations are paramount:

1. Look Beyond the traditional central business district: The best opportunities now lie in mixed-use nodes that offer the “live, work, and play” environment modern talent demands.
2. Prioritise Experiential Buildings: Generic, aging office stock will struggle. Focus on “Class A” properties with high-end amenities that foster community, such as rooftop lounges and collaborative spaces.
3. Embrace Mixed-Use: The future lies in integrated developments that blend office, residential, retail, and leisure. This creates the popular “15-minute city” model where daily needs are within a short walk or cycle.

Savvy investors are already making strategic plays. the Wall Street Journal reported in July that in late 2024 and early 2025, overseas buyers, led by Gulf sovereign wealth funds, invested over $2 billion into Manhattan commercial property. However, their focus was not on the commodity office space of the past, but on trophy assts and buildings with the potential to be transformed into the amenity-rich, experiential destinations that modern tenants crave.

The US office market is not dead, but reborn. The era of passive returns from monolithic towers is over. For Islamic investors, the new landscape requires a discerning, active approach focused on creating vibrant, human-centric spaces. The opportunities have shifted from yesterday’s declining business districts to the bustling, interconnected “playground cities” of tomorrow.

Written by Philip Churchill, first published in Islamic Finance News Volume 22, Issue 42 dated 22nd October 2025.