Nationalizing inner city land would likely have many unintended consequences. I could see it resulting in migration of people and businesses away from the nationalized area only to regroup at a new center that wasn't restricted by direct governmental control. Reasons for that that spring to mind are that planning permissions would certainly be a nightmare, difficult to obtain and extremely slow. If there was a hard quota of apartments vs commercial space it could create a bad situation for businesses and drive them away. The types of residential units may not meet the demand which could drive segments of the population to seek housing elsewhere even if the costs were higher. Poor design decisions for the units constructed could produce areas conducive to crime or just make it unattractive or inconvenient.
There's a long history of national building projects in many countries that have created problems like these.
In Europe there are very many successful examples of national housing projects, indeed many countries have large portions of the housing stock in public hands to this day.
This was generally instituted after WW2, which left the EU housing stock in a far worse condition than the US's today, and left the EU totally impoverished.
So, you can come up with hypothetical problems, but practical experience shows it can absolutely work.
There's a long history of national building projects in many countries that have created problems like these.