Floor Area Ratio
Definition and meaning of Floor Area Ratio in real estate.
Floor area ratio is a zoning metric calculated by dividing the total gross floor area of a building by the total area of the lot on which it is built.
In more detail
Local governments use this ratio, often abbreviated as FAR, to regulate building density and control the bulk of structures in specific zoning districts. A higher ratio allows for taller or denser buildings, while a lower ratio limits development to smaller or more spread-out structures. Real estate developers and investors analyze this ratio to determine the maximum size of a building they can construct on a commercial or residential parcel.
Understanding these regulations is crucial during due diligence to avoid purchasing land that cannot support the desired project size.
Key facts
| Category | Real Estate Investing |
|---|---|
| Abbreviation | FAR |
| Main purpose | Controlling development density and building bulk |
| Used by | Urban planners, developers, and zoning boards |
An investor purchases a ten-thousand-square-foot commercial lot with a zoning floor area ratio of two point zero, allowing them to construct a building with a maximum total floor area of twenty thousand square feet.
Frequently asked questions
Does a floor area ratio of one point zero mean a building can only be one story tall?
No, a ratio of one point zero allows a developer to build a one-story building covering the entire lot, a two-story building covering half the lot, or a four-story building covering a quarter of the lot.
Can a property owner obtain an exception to the floor area ratio limit?
Yes, owners can petition local zoning boards for a variance or purchase air rights from adjacent properties in some cities to build beyond the standard ratio.