How does this mechanism work in concrete terms? My understanding is that Georgism advocates raising taxes on people with property in desirable locations. They decide they can't afford the taxes, so they sell to a developer, who tears down the house and builds a bigger building.
Another name for this process is "gentrification."
The difference is that with the way gentrification works currently, the developer pays the previous property owner lots of money, which isn't so bad. With Georgism, the previous property owner doesn't get anything, because the property tax is so high that the land isn't worth anything. It's similar to being a tenant in a rapidly gentrifying area where rents go up but there's no upside for you.
I guess if you're pro-density and don't own property, that might seem appealing, but this mechanism seems likely to be very unappealing to home owners.
Gentrification is primarily a problem with the current system. I can easily imagine an economic system that decentralizes economic activity akin to Distributism which will make it easier to rebuild and improve run down communities without having to move somewhere else.
You have a 500m^2 plot of land. This plot pays $50k land value taxes. If one person lives on the land that person pays the full tax. If 10 people live on the property they each pay $5k taxes per year. If 50 live there then the tax is $1k.
Property taxes scale with the building so housing more people means higher taxes. That is being avoided by only taxing the land.
Alternatively, people hate taxes, they want to avoid paying taxes. If you want to avoid land value taxes, the only way to do that is to use less land more efficiently.
We see this historically in frontier towns that had absolutely no limits on sprawl (as land on the outskirts was available to anyone willing to stead it) but still had city centers develop and usually to the construction limits of the time.