Floor Area Ratio (FAR) Explained: Calculating Buildable Square Feet

When evaluating raw land or redevelopment parcels, analyzing price per acre or raw land square footage alone can lead to catastrophic valuation errors.

Two land parcels of identical size (10,000 sq ft) in the same municipality can have wildly different values if one zoning designation permits a FAR of 0.5 while the other allows a FAR of 4.0.

Real estate developers, urban planners, and investors evaluate land based on Price Per Buildable Square Foot (Price / BSF) rather than price per raw land square foot.

How Floor Area Ratio (FAR) Works

Municipal planning departments establish FAR limits in zoning codes to control building density, traffic impact, and infrastructure loads.

Floor Area Ratio (FAR) = Total Building Floor Area (GLA) ÷ Total Parcel Land Area

Reversing the Formula to Find Maximum Buildable Space

Buildable Square Feet (BSF) = Land Area (Sq Ft) × FAR Limit

Visual Examples of FAR

1. FAR 0.5 (Low Density Suburban):

   • Parcel Size: 10,000 sq ft
   • Max Buildable Area: 10,000 × 0.5 = 5,000 sq ft building
   • Can be a 1-story 5,000 sq ft footprint, or a 2-story 2,500 sq ft footprint.

2. FAR 2.0 (Medium Density Mixed-Use):

   • Parcel Size: 10,000 sq ft
   • Max Buildable Area: 10,000 × 2.0 = 20,000 sq ft building
   • Can be a 4-story building with 5,000 sq ft per floor.

3. FAR 10.0 (High Density Urban Core):

   • Parcel Size: 10,000 sq ft
   • Max Buildable Area: 10,000 × 10.0 = 100,000 sq ft high-rise tower

Calculating Price Per Buildable Square Foot

When buying land for commercial or residential development:

Price Per Buildable Sq Ft = Total Land Acquisition Price ÷ Total Buildable Sq Ft (BSF)

Real World Developer Case Study

A developer evaluates two downtown parcels offered for $2,000,000 each:

Calculate area conversions between square feet, square meters, and acres with our converter tool: