My $0.02
The high price of land pushes out the multi-parcel block concepts for most established cities. This seems to be a universal law of economics. There is no mechanism for forcing multi-parcel blocks on the market. And, why would you.
Given this fact, protection and appreciation for the existing older fabric of the city (north end, south end, back bay, boston wharf) is important to the city so that there can be a plurality of places to have different experiences. This is what makes a rich and engaging city. Midtown, or Downtown Manhattan means nothing without the Soho, the Village, or Harlem. And visa versa.
I like the rationality of your point.
But Seaport/ID land prices are high for a few reasons beyond ordinary economics (e.g. market forces):
1. Public infrastructure investment, upwards of $8 billion in the immediate area. Among these are CA/Tunnel access, MBTA Silver Line and tunnels, Harbor cleanup, BCEC, etc.
2. Ongoing public and private obligations, for example Innovation District subsidies, promotion and temporary projects, BIC, ICA land, etc.
And there are other factors which increase development costs:
1. A host of opaque exactions by the BRA -- "community benefits," "linkage," "sinking fund," etc.
2. A host of offsite projects required of developers by the BRA.
3. Speculators have increased price by flipping vacant parcels after upzoning. New owners are paying a premium (to speculators) for unbuilt parcels carrying development rights pre-approved by the BRA.
Whether you look at speculation in the sale of vacant parcels enriched by public investment, or you look at the BRA's exactions from property owners and developers, or you look at the speculative market in the sale of development rights, the result is a net decrease in dollars available for onsite improvements.
All of the above were (and are) in the domain of the BRA in its management of each project.