> a luxury apartment building goes up, surveys the market, and sets its rents 30% higher for the privilege of living in a new building with a gym for dogs or ball pit or whatever. Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town," and so on.

I think that might not be the right cause and effect relationship. The actual cause is increased demand. This creates both the increased pricing of existing stock and an incentive to build new stock.