High rise buildings cost significantly more per unit to build than mid rise buildings or single family homes. They would continue to exist or even increase in number in places like Manhattan because some people are willing to pay the extra cost to have even a slightly shorter commute, and then the cost of land closer to that area will still be higher than it costs further away because of expected future growth. Building mid rise buildings reduces the effective scarcity of land, doesn't eliminate it.

So the availability of housing 100 miles away still affects the price, because there are still people (e.g. retirees who only go into the city once a month) who would choose a longer distance for a lower rent, or who prefer to live in a lower density area even for a similar cost, and giving them a place to get that means they're not bidding up the price in the city.