I wonder if one of the residents' worries when talking about "character" is not only density but style. It's not a secret that they have been tearing down some properties to redevelop them, and most of the new houses have an ultra-modern look, that doesn't fully fit the historical vibe the neighborhood is going for. And with the generic high-density buildings there has been popping in through the city, they just feel like they will lose all the current charm. I think it could be more interesting to try to find some materiality and look-feel of the new developments that will gain confidence with residents. Showing that a high-density development can fit in their neighborhood.
Here's an example of a trend happening in Europe with new developments against ultra-modern architecture.
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