city-based here is compound, you can see it as adjective

you are right but city have all types of resources

you are right but city have all types of resources

you are right but city have all types of resources

In this case, 'based' means 'located'. Here is another way to say the sentence: Traditionally, many industries and companies set up business headquarters in the city, but as time has changed the need to be located in the city has diminished.