Could be shoe-box sized flats or nothing even for any human living at all, for example. The most efficient land use need not be "nice".
It's just one local revenue stream, comparable to property tax. Nothing about it requires or precludes any other policy goal like making cities "nice" places to live.
If the revenue stream weren't that big, would it change the use of land much?
Maybe we can just make small, directionally correct policy changes? With slightly better-aligned incentives? Even if they are modest.
Most cities in the US aren't even near 'a little bit efficient', let alone 'most efficient'. You're worrying about what happens if the waddling baby at the ten-yard line on the football field runs out past the end zone and keeps going onto the highway.