They did and that place is called Mestre - right next to Venice on mainland. Lots of space and reasonable housing. I think the main problem with living in Venic

They did and that place is called Mestre - right next to Venice on mainland. Lots of space and reasonable housing. I think the main problem with living in Venice is that the only jobs available are in services and those do not pay enough to compete in housing with tourists. So attracting remote workers and retirees is the only reasonable play. One note on population drop - you would expect it even without tourists. 50 years ago Italy was poor and families had many kids crammed into small apts. No one lives like that now - anything less than 1bdrm/kid is cruelty. Considering virtually no new housing in Venice in last 100 years (no land), drop in population is expected.