Your post reminded me of how my own perception has changed.
I remember when I graduated college I interviewed and got a job and went to work at this company that in hindsight, had these awesome large high end cubicles, with wooden U shaped desks and tall partitions. Yet, I remember walking to my cubicle and feeling a pang of sadness. I could see this huge cubicle farm and I was being guided to my own "little" cubicle to go and sit in. Felt like a hamster in a cage - a small cog in a huge machine. Which I guess I was. All the managers had offices along the outsides of the farm, facing the windows.
But now that my expectations have been lowered further... I'd take that cubicle setup over an open plan office any day.
If space is at such a premium, the solution is to encourage more remote work. At this point, the industry, with its years of experience in outsourcing, offshoring and working with distributed teams has proven that remote work is an excellent and efficient model. At the very least, it should be far more mainstream than it is.