I think they probably picked Iron Fist because they were planning on doing a bunch of street-level shows and thought "hey, he and Cage have had street-level adventures in the past, let's use him" without really thinking about what that meant or how the character could've been pulled off properly, until it came time to actually create the show. People who know Luke and Danny's very early comics of their classic runs were set in a seedier New York.
Remember the stories of Marvel not even knowing what direction to take the show in? Having trouble with production and not understanding how to translate the character to screen?
Marvel Hasn’t Cracked The IRON FIST Series Yet
Add to the fact that Iron Fist was supposed to be the third series released (got switched with Cage) and then DD got a second season and Punisher got picked up for 1 and IF's production had to hit the timeline before Defenders, and Marvel terribly handling the "controversy" regarding Danny's race (both in and out of the show) from people who don't even care about the character and we got the terrible end result.