When you build the high-margin apartment, people vacate other housing units to move into it, reducing demand on the older units, which reduces prices in the area. This is just the law of supply and demand, but you don't have to derive it axiomatically: it's empirically what happens when we increase supply at market rates.

I'd like a land value tax too, but it's not going to happen, and an LVT would guarantee market-rate development.