FAR stands for Floor Area Ratio (sometimes called FSI, or Floor Space Index). This ratio tells you how much you’re allowed to build on a parcel of land; it’s a ratio that compares the total floor space in a building to the size of the plot it sits on. It’s pretty straightforward, and, though it seems like it’s a ratio measuring the footprint of a structure, it actually measures the floor space of the entire building, even the upper floors, rather than just the area of the first floor. It’s the area of all floors of a building divided by the area of the parcel of land it sits on.
Here’s the formula:
FAR = Total Built-Up Floor Area ÷ Area of the Lot
For example, if you own a 10,000-square-foot plot and your city’s zoning laws allow a FAR of 2, that means you can build 20,000 square feet in total. That could be two floors of 10,000 square feet each, four floors of 5,000 square feet, or any combination that adds up to 20,000. You could theoretically build a 2-story building that takes up the entire lot, or a building that’s 10 feet by 10 feet… and 200 stories high. Of course, there are tons of other zoning regulations that would likely intervene to prevent this 200-story building, but a FAR of 2 would not be one of them.
For more on FAR, check out our article on “You Need to Understand FAR/FSI if You’re in Real Estate.”
