Interesting. I bet that in today's world of environmentally friendly construction they would be hard pressed to completely level and start over. A good steward is using less and by reusing existing structure or materials, that means you are wasting less. Besides, demolition is not cheap.
In doing a bunch of very large scale renovation work myself it can really go either way. If done correctly not building new foundations, exterior skin, or a superstructure can save you a bunch of money. I've also seen where the client would have been much better off financially with leveling the building and starting over, but those people had more money than sense.