Urban areas play a key role in the development of European territories, and it is essential for them to be sustainable and efficient. However, the European cities are facing some challenges related to certain trends that are threatening their sustainable development and operational efficiency. In this paper, we compare the contribution of three policy measures—cordon toll accompanied by public transport improvements, teleworking and re-densification—to address different city challenges. The policy assessment requires a long term simulation tool, i.e., the MARS (Metropolitan Activity Relocation Simulator) model, which is able to consider interactions between land use and transport systems. The simulations of the different policy scenarios were carried out for the case of Madrid in the period 2012–2031. The contribution of the policy measures to address the city challenges was measured through different indicators. The results indicated that the three policy measures contributed to the time efficiency challenge, by saving time for the commute, reducing congestion and improving the traffic flows at peak hours. The most effective policy in this regard is the teleworking measure. Another challenge addressed by the three policies was the accessibility to PT. The three policy scenarios, when simulated, showed higher PT use, especially the cordon toll scenario. However, the only policy that really contributed to the energy, emissions and pollution city challenges was the re-densification measure, which reduced travel distances and encouraged a mobility that relies more on PT and slow modes.