FAR shows up in almost every conversation about a development site's value, and it's the single most important number a property owner can know about their own lot. Here's what it means and why it matters so much to what your property is worth.

What FAR actually means

Floor Area Ratio (FAR) is a multiplier set by your property's zoning district. Multiply your lot's square footage by the FAR, and you get your buildable square footage: the total floor area a building on that lot is allowed to have. A 5,000 square foot lot in a zone with a FAR of 6.0 allows up to 30,000 square feet of buildable area, regardless of how large the existing building on it happens to be.

As-of-right vs. bonus FAR

Every zoning district has a base, "as-of-right" FAR that applies automatically. Many districts also allow bonus FAR above that base, in exchange for things like providing affordable housing or public open space, depending on the applicable program at the time. Bonus FAR can meaningfully increase buildable square footage, but eligibility and mechanics change over time, so it's worth confirming current program rules for your specific lot before assuming a bonus applies.

A simple example

Say your building is a 3-story walk-up using roughly 6,000 square feet of floor area, sitting on a lot zoned for a FAR that allows 30,000 square feet. You're using 20% of your lot's development rights. That unused 80%, roughly 24,000 buildable square feet, is what a developer is actually pricing when they make you an offer, not the value of your current three floors.

Why under-built lots are worth more as land

This is the mechanism behind almost every "your building might be worth more as a development site" conversation. When a large share of a lot's buildable square footage is sitting unused, the land value (buildable SF x recent $/BSF comps) can exceed what the existing building could ever generate in rental income, even if that building is fully occupied and well maintained.

How to find your own numbers

Your lot's zoning district and base FAR are public record through NYC's zoning maps. From there, buildable square footage is simple multiplication, though bonus FAR eligibility, easements, and other lot-specific factors can complicate the real number. If you don't already know your building's FAR utilization, that's usually the first thing worth finding out.