These units just intrinsically won't be worth as much.

Yes, developers tend to only build luxury housing, because they are greedy and want to maximize profit. But part of the reason they do that is because building anything is very expensive, so if they're going to build they might as well go all in and build expensive condos.

These would be different because the building is already there. The builder will avoid a lot of the costs, and on the flip side the units will be constrained by the existing building, which was built as cheaply as they could get away with because nobody cares how nice a cubicle farm is. It would make economic sense to build more sanely priced apartments and make a quick buck instead of tearing down the building to build more luxury. It's actually better for their short term profit for once.