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So, all cims and companies don't own any of the buildings that they occupy. There's some invisible owner for every building whose function is to act as a money sink for the city's economy.
Whenever the occupants pay rent, it goes into a pool that is represented by the building level/progression bar. Services that charge fees like water, electric, and garbage collection deduct money from the building's pool of collected rent payments. When the building buys lumber or concrete for maintenance/upgrading or wood/petrochemicals for heating in cold climates, that will also deduct money from the common pool.
Land value is the main determiner for what a building will charge for rent. The happiness of the tenants also affects how much of their income they are willing to pay for rent but that doesn't matter if they don't have enough income in the first place.
The upkeep and maintenance costs of a building will remain the same regardless of if a building is occupied or not. That's why new buildings, with low rent, and not at full occupancy, often become quickly abandoned. When a building's rent money pool goes negative, it's like the owner deciding to cut their losses and not pay for upkeep which causes the abandonment.
In some cases, you just have to accept that some residential buildings will not level up, and probably by design. For example, once you have colleges and universities, you will start having cims who move in as students. They will look for the cheapest housing that is closest to the school and will gravitate towards the low rent high density. The low rent payments are enough to keep the building from becoming abandoned but will take a very long time, if ever, to get the building to level up, which you don't want to have happen anyways because higher level buildings have higher costs and higher rents.
Now as to why low density residential levels up so quickly, it just comes down to balancing. The maintenance costs are very low while the sizes of the lots and the land value can make the rent payments very high. With each child in a family giving the household a tax credit, the huge "spacious homes" buff and probably the big "walking distance to elementary school" buff, the amount of income the household is willing to pay for rent is much higher.
1. Make a grid and put low density commercial in every other line down the grid.
2. Make alleys in the remaining lines of the grid to force small residential buildings to be built.
3. Zone offices and make all sims educated so they become wealthy, don't allow too many low wage jobs.
4. After many many hours (it will seem like it will never level up, but you just have to go afk for hours) eventually they will level up. But it might take days of leaving your computer on while you sleep.
Have you considered just reducing to zero your electric and water fees?
Yes I lower all fees, the income from office buildings is more than enough to pay your citizens to live there. Going negative in the taxes gives them more money to upgrade their buildings with. Also try to put all your offices far away from the residential area and put subway stations there. That way they will not cause traffic jams and just take the subway to work.
Actually I don't think you can lower fees now that I looked back. If you know how to, let me know how. But I pay sims to live there through taxes. My old city has too many sims and runs slow, but I did unlock all signature buildings without cheating on my old city. Here's how I set up my new city and it's close to unlocking them all.
https://steamcommunity.com/sharedfiles/filedetails/?id=3229287998
https://steamcommunity.com/sharedfiles/filedetails/?id=3229287989
https://steamcommunity.com/sharedfiles/filedetails/?id=3229287962