If theaters could pay market rents, or close enough to them that a developer would subsidize them as an amenity, they would be built. Clearly they don't generate enough income suggesting that the market is not demanding more of them. One might argue, in fact, that in the case of a real shortage of theaters, there'd be enough charitable contributions to help support new theaters.
It's no surprise that theater performers want more spaces - that would mean lower rents and more availability of space for them. It's like the society of civil engineers wanting more infrastructure funding - potentially reasonable, but in their own interest
The article about central square has a lot more to do with Cambridge's ridiculously tight zoning limits in a dense commercial node atop a subway stop. Had they allowed even moderate growth in that area, rents would be considerably lower.
Besides the issue of zoning, though, artsy areas move over time in dynamic cities. Areas rise in fall in price and trendiness. It shouldn't be an enormous surprise to us that we see arts districts moving. The problem today is a lack of sufficient housing construction to allow filtering and creation of new cheaper districts.