Assume that the people funding the companies are not total idiots. So there must be good reason to fund companies in these hot cities---especially given all the down sides yous mentioned. What could they be?
That's not to say they're idiots, of course not. But it might be to say that the reasons for placing their company in the center of a large city aren't very rational or well-considered.
And lots of them do. See all the startups in decidedly suburban Silicon Valley. (And yes, I am being a bit snarky here in equating everything outside of cities, be that suburban sprawl or proper countryside.)
Also see SAP in Walldorf.