Record venture capital investment in artificial intelligence is concentrating in a handful of coastal hubs, creating a stark divide between tech markets poised for sustained homebuilding demand and those facing headwinds.
US startup funding surged 75.6% in the first half of 2025 to $162.8 billion—the strongest showing since the record first half of 2021. But the money is flowing to select markets, with the San Francisco Bay Area, New York, Los Angeles, and Boston capturing over 50% of all venture deals and 73.4% of total deal value in Q2 2025.
The AI Investment Surge
AI companies accounted for 64.1% of total venture capital deal value and more than a third of deal volume in the first six months of 2025. Notable transactions include OpenAI’s $40 billion raise—the largest private funding round in history—and Meta’s $14.3 billion stake in Scale AI.
“While 2021’s surge was fueled in part by the pandemic-era zero interest rate environment, today’s boom stems from major AI bets and deep-pocketed commitments by Big Tech,” said Ali Wolf, Zonda’s Chief Economist.
Markets Positioned for Growth
Three factors drive a market’s potential to grow AI-focused talent: universities with established AI programs, major tech companies advancing AI development, and available venture capital investment, according to CBRE’s 2025 Scoring Tech Talent report.
The Bay Area dominates across all three, capturing nearly 75% of US AI venture capital funding since 2019 and housing two of the nation’s top five university AI programs (Stanford and UC Berkeley). Other well-positioned markets include Seattle, New York, Boston, Los Angeles, and Washington, DC.
Tech Talent Migration Patterns
Between 2021 and 2024, tech talent employment grew 12.2% nationwide, adding 670,000 workers. Dallas-Fort Worth led with 47,100 new tech talent jobs, followed by New York (47,940), the Bay Area (36,950), South Florida (15,910), and Austin (11,970).
The five fastest-growing tech talent markets were all in the Sunbelt: Dallas-Fort Worth (26.1%), South Florida (25.1%), Orlando (21.5%), Charlotte (16.3%), and Tampa (16.2%).
Office Demand Signals Strength
In the first half of 2025, tech firms made up 17% of all US office leasing, up from 10% in late 2022. In San Francisco alone, AI companies have leased one out of every four square feet of office space over the past 2.5 years.
Builder Implications
Markets combining AI investment, top university programs, and established tech company presence—led by the Bay Area but including Seattle, New York, and Boston—should see sustained demand from high-earning buyers. Sunbelt markets like Dallas-Fort Worth have captured significant tech talent growth but lag in venture capital investment.
“The majority of tech companies have not yet turned a profit on their AI investments and there are large gaps between AI expenses and current AI revenue,” Wolf noted. Builders in AI-heavy markets should watch for signs of overheating while capitalizing on near-term strength.
The insights in this article were taken from more in-depth research reports published in Zonda’s National Outlook subscription.
