Surely the opportunity cost of redeveloping a few townhouses, 2 storey commercial buildings, parking lots, etc., is far less than that of a 15 storey office building?
Is the paperwork so much more involved for rezoning that it dissuaded them from doing the lower cost option?
First, can we acknowledge that you're asking for speculation. Many of us here are very knowledgeable about the development pipeline in the city but only a few can speak to discussions of motivation at the time of a property purchase some years back, and then only on a small number of parcels.
In a generic scenario there are lots of things that enter into buying a building, including, for instance, the steady stream of income it may provide an investor who may wish to buy and hold the asset for an extended period of time.
But certainly, the potential for redevelopment may well be a factor depending on the buyer and the purchase.
That potential is about zoning, its about precedent, its about market demand, its about ease-of-assembly, amongst many other things.
If a building is already zoned for Mixed-used/Multi-Res, then that may serve to eliminate the need for an Official Plan Amendment; if the existing building is 10 storeys, you know you can build that (in most cases);
but if the area permissions or precedents are for 35 storeys you know you can likely achieve that or at least something close.
Where a building zoned neighbourhoods or employment is much more of a pain to get rezoned, its not a sure thing by any means (higher risk) and if achieved, will almost certainly add 1 or more years to the process and many millions of dollars;
If a building is in or next to a high demand area/subway, you know you will pay more to buy, but also receive more when you sell. Even if the margin were similar on a smaller development, the (potential) absolute return is higher. (albeit higher risk)
Buying one building which provides a sufficient lot for a project is generally much quicker, and sometimes cheaper, than taking much longer to buy multiple smaller properties.
Potential opposition matters. Propose a midrise, never mind a tower on a small side street of SFH and typically expect you will go to the OLT and there may be a very prolonged cycle to getting a project done. Propose something in an office/hirise district and mostly, blowback is considerably less.
In addition to all of the above, you can also only buy what someone is selling (of course you can cold offer to push, but its more of an effort with a less clear outcome, particularly if you need multiple properties)