Floor area ratio (FAR) is a building's total gross floor area divided by the area of the lot it sits on, expressed as a decimal. It is a core zoning control that caps how much building can be built on a parcel. An FAR of 2.0 permits floor area twice the lot size, regardless of the number of stories.
How Is Floor Area Ratio Calculated?
Floor area ratio is calculated by dividing a building's total gross floor area by the total area of the parcel it occupies. The formula is FAR = gross floor area / lot area. Per Wikipedia and Wall Street Prep, the result is a decimal: an FAR of 1.0 means floor area equals lot area.
Building height does not enter the calculation. Per the Wikipedia definition, a single-story 20,000-square-foot building has the same FAR as a four-story 5,000-square-foot building on the same lot, because both hold identical total floor area. FAR limits bulk, not shape, so a developer can trade footprint for height within setback and height rules.
FAR value | What it permits on a 10,000 sq ft lot |
0.5 | Up to 5,000 sq ft of floor area |
1.0 | Up to 10,000 sq ft of floor area |
2.0 | Up to 20,000 sq ft of floor area |
5.0 | Up to 50,000 sq ft of floor area |
To reverse the formula and size a deal, multiply lot area by permitted FAR. That product is the maximum buildable floor area before any density bonus.
Why Floor Area Ratio Matters
Floor area ratio matters because it sets the income ceiling on a parcel: floor area is what a building leases, so the FAR fixes the maximum rentable product the land can carry. Two identical lots priced the same are not equal deals if one is zoned 1.0 and the other 3.0, because the second holds three times the leasable area.
FAR converts land price into a cost per buildable square foot, the metric developers actually underwrite. A $2,000,000 lot at FAR 2.0 on 10,000 square feet yields 20,000 buildable feet, or $100 of land cost per buildable foot. Raise the permitted FAR and that cost falls; lower it and the same land price no longer pencils. This is why entitlement work to secure a higher FAR often creates more value than the physical construction.
Municipalities also use FAR as a policy lever. Per Local Housing Solutions and Arlington County program documents, jurisdictions grant density bonuses, additional FAR above the base, in exchange for public benefits such as affordable housing. In Arlington's Nauck Village Center, developers can receive an increase up to 2.0 FAR when at least 10 percent of residential units are committed affordable.
Example
A developer evaluates a 40,000-square-foot commercial lot in a district that permits a base FAR of 1.5, with a density bonus of up to 0.5 FAR for providing affordable units. The table walks the buildable area and land cost per buildable foot at both the base entitlement and the bonused entitlement, using a $6,000,000 land price.
Item | Base | With density bonus |
Lot area | 40,000 sq ft | 40,000 sq ft |
Permitted FAR | 1.5 | 2.0 |
Maximum buildable floor area | 40,000 x 1.5 = 60,000 sq ft | 40,000 x 2.0 = 80,000 sq ft |
Land price | $6,000,000 | $6,000,000 |
Land cost per buildable sq ft | $100 | $75 |
At the base FAR of 1.5, the lot yields 60,000 buildable square feet and land costs $100 per buildable foot. Earning the 0.5 density bonus lifts permitted FAR to 2.0 and buildable area to 80,000 square feet, cutting land cost to $75 per buildable foot. The extra 20,000 square feet of leasable product for the same land spend is the reason developers pursue the bonus.
Variations and Edge Cases
Floor area ratio is defined differently across jurisdictions, and the exclusions decide how much a parcel really holds. The variants below show where the standard formula bends.
Variant | Treatment |
Floor space index (FSI) | Same concept as FAR, common outside North America |
Gross vs net FAR | Some codes exclude parking, mechanical, or below-grade space from countable area |
Density bonus | Additional FAR granted for affordable housing or public benefits |
Air rights transfer | Unused FAR sold or moved to an adjacent parcel |
Overlay district | Adds an FAR cap or bonus on top of the base zoning |
Per municipal planning definitions, which floor areas count is the pivotal detail. A code that excludes structured parking and mechanical space from the countable floor area effectively lets a developer build more usable product under the same nominal FAR than a code that counts every square foot.
Floor Area Ratio vs Lot Coverage
Floor area ratio is often confused with lot coverage, and both limit building bulk, but they measure different things. Floor area ratio caps total floor area across all stories as a multiple of lot area. Lot coverage caps only the building's footprint, the share of the lot the structure sits on at ground level, expressed as a percentage.
FAR governs total volume of floor area; lot coverage governs footprint. A tower can have low lot coverage and high FAR by stacking many small floors, while a warehouse can have high lot coverage and low FAR with one large floor. A parcel must satisfy both limits at once, so a generous FAR is useless if lot coverage, setbacks, or height caps prevent building enough floors to reach it.
Frequently Asked Questions
How do you calculate floor area ratio?Floor area ratio is calculated by dividing a building's total gross floor area by the total lot area. The formula is FAR = gross floor area / lot area. A 60,000-square-foot building on a 40,000-square-foot lot has an FAR of 1.5. To find maximum buildable area, multiply lot area by the permitted FAR.
Does building height affect floor area ratio?No. Building height does not enter the FAR calculation. A single-story 20,000-square-foot building has the same floor area ratio as a four-story 5,000-square-foot building on the same lot, because both contain the same total floor area. FAR limits total bulk, while height limits and setbacks separately constrain the building form.
What is a density bonus in floor area ratio?A density bonus is additional FAR a jurisdiction grants above the base limit in exchange for public benefits, most often affordable housing. Per Local Housing Solutions, in Arlington County's Nauck Village Center developers can receive an increase up to 2.0 FAR when at least 10 percent of residential units are committed affordable.
Related Terms
Zoning
Highest and Best Use
Ground-Up Development
Mixed-Use Development
Pro Forma