Yes, the converted buildings may end up “luxury apartments” with higher rents. Today, nobody builds any new apartment building that they don’t label luxury. Also, luxury sometimes just means central AC and in unit washer dryer. Many cities require a percentage of any new apartment building to be earmarked for lower or moderate income housing.
There is some evidence that even adding new higher end apartments to a local market, eases some pressure on the lower end of the market (I have read this but can’t remember where or when - so I cant supply a link).
This doesn’t work if the apartments are so high-end that they become strictly investment properties with absentee owners. This has happened in NYC, particularly with foreign investors.