The San Francisco Bay Area improved its standing in a new ranking of the nation’s top magnets for talent, thanks to exploding investment in artificial intelligence and other rapidly growing technology sectors.
The Bay Area, the nation’s technology capital, placed second in real estate services firm JLL’s Talent Hubs 2025 report. That’s up one slot from last year and still trailing New York, once again No. 1. Los Angeles, the engine of the entertainment industry, fell one spot from last year to rank third.
“Recovery in equity markets and renewed venture capital flows had a notable impact on market distribution in 2025,” wrote the authors.
While the boom of artificial intelligence has spotlighted the Bay Area in recent months, growing sectors such as robotics and advanced manufacturing are also drawing more startups and top graduates to the nation’s tech capital, Chris Pham, a JLL senior analyst who covers the region, told CoStar News.
That growth has been fostering a long-awaited recovery in San Francisco’s office sector, the country’s hardest hit market for that property type as a result of a shift to remote work when the pandemic hit.
San Francisco’s office vacancy rate of 22.9% is still a far cry from the 5.6% seen prior to the pandemic, and it is well above the nation’s 14% average, according to CoStar data. However, tenant move-ins are now exceeding move-outs in the city, helping push that vacancy rate down nearly 1% since the start of the year.
Meanwhile, an influx of well-heeled tech workers is driving up apartment costs in San Francisco. The city’s rents of $3,314 per month are up 6% year over year, marking the nation’s highest annual rent growth.
Back to the office
Markets that have benefited from some high-profile corporate relocations, particularly in Texas and Florida, are on the rise. JLL noted that Tampa reached the top 25 talent markets for the first time this year, and Dallas-Fort Worth made the top 10 for the first time, while Houston came close at No. 11. Other top-ranking markets, from No. 4 on down the list, were Boston; Chicago; Washington, D.C.; Atlanta; Philadelphia and Seattle.
As big employers like Amazon and Walmart this year undertook efforts to call employees back to the office, more talent has concentrated in the country’s largest markets, noted the report. It added that a surge in venture capital funding “drew more graduates to markets with outsized VC activity,” such as the Bay Area.
“In downtown San Francisco, the daytime office worker population has seen one of the largest increases in the nation over the past year,” noted a CoStar market analysis, “boosted by the AI sector’s strong preference for in-office collaboration.
“The downtown area is regaining some of the vitality that made it attractive to employers and workers before the pandemic,” said the CoStar analysis.
Analysts have noted that recent college graduates are facing one of the toughest job markets in years, though postings for white-collar sectors edged higher during the first half of the year, noted JLL in its report. But as more young, educated job-seekers gravitate to major markets, they are facing high rents and difficult-to-find apartments, as higher interest rates and other factors have driven up the cost of living considerably, especially in major urban markets.
“In markets where outpaced population growth has been met with inadequate new housing development, these cost-of-living pressures are more acute and driving greater upward pressure on wages,” noted the authors.
The strong demand for AI jobs has also helped drive wages, with software developers seeing salaries increase despite job cuts in tech. Median compensation in the Bay Area for software engineers leads the entire country at $269,000, according to data from Levels.fyi.