I'll start this post with an admission of ignorance: I've long had a casual interest in urban economics, although I've never had the opportunity to give the literature the attention it deserves. Given its policy focus, however, there would seem to be ample room for alternative ethical approaches, especially regarding property rights as well as the nature of welfare or well-being in an intrinsically and intensively social context. Whether or to what extent this is been done, however, I have no idea.
Evidence that such considerations are being addressed by urban economists comes from a feature on Harvard economist Edward Glaeser and his evolving views on the roles of the market and the state in the "life" of cities. (The piece was prompted by Glaeser's latest book, Survival of the City: Living and Thriving in an Age of Isolation, co-authored with his Harvard colleague, health economist David Cutler.) Whatever one may think of Glaeser's shift from his early libertarianism to his more recent endorsement of government intervention, his concern with not only growth, income, and employment, but also health, poverty, and well-being, suggests the kind of ethically nuanced approach the topic needs.
I find this very encouraging, and I look forward to investigating his work, and that of other urban economics, more in the future. (I do have to wonder, still, if more traditionally academic work in urban economics, by Glaeser or others, incorporates the same broader approach. If anyone knows of work along these lines, I would be more than happy to showcase it here.)