It seems that increased use of the Internet for economic transactions would mean a decrease in the demand for all physical land, far outstripping whatever increase in the demand which might arise for any particular type of physical land. I do not think that point 1 is true. Well, retail space, let's say, because of all the online retail shopping going on. That translates to more goods and services being provided for the same amount of labor. Sellers can now sell more, increasing demand for the land on which their wares are made.
Consumers can consume more, increasing demand for land on which to live and consume.
So now we move on to point 2. But what is scarce is time . The rentable scarce thing on the internet is the capacity to get your information in front of users' faces first . That's why domain names are valuable. And that is becoming increasingly valuable.