It is possible to regulate for safety (with criminal penalties for breach of regulation, or possibly a bond which can be forfeited to the city, although the latter creates a barrier to entry and probably isn't a good approach) without creating artificial scarcity.

Commercial zoning regulations are quite different, because they relate to land, which is a naturally scarce resource; the scarcity is not created artificially by the government to keep the supply down and prop up special interest groups by keeping competitors out of the market.