ATLANTA—For all the talk of residential, retail and hotels moving into urban cores, some industry watchers report a wave of suburban companies moving their headquarters downtown or establishing second offices in city centers to bolster hiring and enhance employee retention. Studies show Millennials, in particular, are driving the trend toward alternative transportation issues like Uber and Divvy bikes because they don't want to own a car.'

“Growing tech companies are at forefront of recruiting young, smart talent in urban areas, and now traditional firms are following their example,” says Chad Bermingham, vice president of Cresa's Chicago office. “In Chicago, Mayor Emanuel has been enticing traditional companies to come downtown since he took office. Also, the City has been renovating subway stops, building new parks, and generally improving the look and feel of the Downtown area, at the neglect of outlying areas.”

Bermingham points to several large corporations moving from Chicago's suburbs to Downtown, including Lenovo, United Airlines, Hillshire Brands and ConAgra. Kraft-Heinz is moving its headquarters from Northfield into 175,000 square feet at the Aon Center in early 2016 and Motorola, currently headquartered in Schaumburg, is currently seeking 150,000 square feet of space and is focused on 500 West Monroe.

“As a result of the new focus on downtown areas, office rents are rising and developers are scrambling to build high-rise office towers as quickly as possible,” Bermingham says. “Other landlords are spending significant capital to renovate existing buildings in order to keep up with the competition. Many new buildings are currently under construction in Chicago, and many of them are already pre-leased.”

Until high office rents outweigh the advantage of being able to recruit young talent for companies (or high apartment rents outweigh the advantages of living in urban centers for Millennials), Bermingham says, these trends will continue. Steve McKendry, branch manager of Daum Phoenix, agrees, but notes that not every corporation will choose a metro like Chicago, New York City or Los Angeles. Urbanization is also impacting smaller cities.

“Cities that offer the millennial employment opportunities and an affordable style of life will be competing with the larger, urban core markets that are too expensive for most of that demographic,” McKendry says. “In an effort to be competitive in the job market, corporations often select locations other than major urban centers for their expansion or will move their corporate headquarters to cities that offer a more affordable cost of living. This trend is creating more demand for office, retail and industrial space in those markets.”

Want to know what's really driving the urbanization trend? Read this.