Falconius,

The building that are cramped are in the market district which is at the center of the original areas of the city and prime real estate. This is where the people come to the market place and shop. Anyone selling goods wants to be close to where the action is. In the dock area, the houses aren't butted up against each other, but there is very little land per house. The area between the docks and market district is an area where the occupants are a little more affluent (say lower middle class for a better term) and have larger houses and a little more land area where they could have small herb and vegetable gardens. That was my thought process behind the way things were laid out.

The dock area is about to get transformed. Still considering what I will did with the area between market district and docks.