Floor Area Ratio (FAR)

Definition of "Floor Area Ratio (FAR)"

Written by

Elkin Marcillo

Marcillo Real Estate

The ratio between a structure's total floor area and the total land area of the land upon which it is constructed. The floor area ratio definition is the ratio of the total amount of usable floor area that the building has to offer the homeowner, from the total area of the property on which the building has been constructed. The floor area ratio must conform to the building code's floor area specifications. A bigger floor area ratio is likely to represent urban highly populated areas, with high population density per square mile where there are more high rise apartment buildings and condominiums instead of detached family homes. The area ratio is used by local governments for use with zoning codes issues and delimitations.

The FAR (Floor Area Ratio) is calculated by dividing the total building floor area by the total building lot square area:

Floor Area Ratio = Total Building Floor Area/Gross Lot Area

What is the Floor Area Ratio?

When you consider the floor area ratio you don’t only look at the footprint of the building but at the whole floor area of the building. The things that are taken out of the equation in this calculation are all the unoccupied areas of the area like basements, stairs, elevator shafts, and parking garages. 

What variates the floor area ratio of a city are factors like population density, patterns of population growth, and activities that involve construction in a city, residential neighborhoods, condominiums, etc. This affects the nature space, parks in cities where residential areas take over. These floor area ratios of cities are determined by local governments that enforce regulations and restrictions of new constructions to stabilize the balance of this ratio.

Being a key determinant of developments in any country, the floor area ratio is a deterrent to construction but it keeps it regularized. Not only the real estate industry struggles to maintain an acceptable level of floor area ratio, but any kind of industry throughout the country in order to open up space and the resources of the land to the real estate developers. A high floor area ratio allows developers to construct buildings for homebuyers, businesses, and industries, which increases sales and provides supply for increasing demand.