Because the bulk of the cost in building a building is in getting the land and getting the structure up. The nice finishes that make an apartment "luxury" - gra

Because the bulk of the cost in building a building is in getting the land and getting the structure up. The nice finishes that make an apartment "luxury" - granite countertops, stainless steel appliances, hardwood floors - these are insignificant compared to the cost of the building as a whole, but have a larger impact on how much you can rent the apartment for. So making a building that's not luxury is essentially leaving money on the table. It's a minor investment that produces a large return. Of course, since everyone is doing it, the market for luxury apartments gets saturated while the more affordable market is underserved.