The floor area ratio (FAR) refers to the total floor area of a building in comparison to the size of the land on which the building is constructed. If the ratio is higher, this tends to indicate that urban construction is occurring. This particular ratio is easy to calculate by dividing the total floor area of a building by the total area of the lot.
Floor area ratio is essential to zoning ordinances for land development. This ratio is used by local governments to create zoning codes. The reason that this ratio has proven to be essential for zoning codes is because the zoning ordinance could be used to tell developers what the lot coverage percentage or size of yards should be when development begins.
With this ratio in place, developers can avoid building to the max size allowed for the property without needing to solely rely on height and yard dimensions. Here is the ultimate guide to floor area ratio and what it means to the development of any building.
What is Floor Area Ratio?
Floor area ratio is a simple calculation that results from dividing the floor area of a building by the total area of a lot. If you’re building a home, the floor area would be the size of the floor-plan for the home you’d like to construct. The land that exists within the property boundaries would be the lot.
However, this calculation can be far more valuable than a square footage calculation. Square footage calculations exclude any unoccupied areas in the home or building. These areas include everything from parking garages and elevator shafts to stairs and basements. Keep in mind that a building with just one story can have the same floor area ratio as a building with three stories.
Local governments will use floor area ratio to place limits on how large homes and other buildings can be, which is necessary because of the limited space or capacity that exists in every city. The accepted ratio can differ with every city as a result of such factors as:
- Growth patterns
- Construction activities
- Population dynamics
- How the land is meant to be used
The FAR calculation is commonly used in the land use planning industry to determine development intensity for different types of land. This calculation can either be used to reduce the intensity of development for the purpose of mitigating environmental impacts or to effectively control the scale and mass of development.
When determining what FAR limits should be, local governments take numerous factors into account. While limiting development can reduce environmental impacts, it’s also a deterrent to future construction in the area, which can hurt the economy.
The real estate industry usually attempts to increase the floor area ratio, which increases land resources and opens up space for developers. When the floor area ratio is relatively high, developers can finish more projects, which improves sales, decreases project expenditures, and provides more supply to meet any demand.
Difference Between Floor Area Ratio and Lot Coverage
The floor area ratio measures the size of a building relative to the total lot size. On the other hand, lot coverage takes the size of every building and structure into account. Keep in mind that the lot coverage measurement includes garages, sheds, swimming pools, and any non-conforming buildings.
To understand exactly how floor area ratio is used, let’s say that a 1,000 square-foot building is set to be constructed on a piece of land that’s around 4,000 square feet in size. When you divide the first number by the second number, you end up with a floor area ratio of 0.25x. This calculation would remain the same regardless of the number of floors that the building has.
Floor Area Ratio Varies by Structure Type
When you want to calculate floor area ratio, you should know that the FAR calculation can vary by structure type. In fact, FAR is different depending on if the land has been zoned for residential, commercial, or industrial purposes. Central business zones tend to use the floor area ratio more than any other zoning type. When the land is set to have a high intensity of development on it for the purpose of constructing office buildings, hotels, and stores, the floor area ratio is essential for making sure that the constructed building doesn’t go over the zoning limits set by the local government.
Because of the limitations placed on floor area ratio in urban area, many developers focus on constructing buildings that reach 10, 50, or 100 stories high. Since adding more stories to a building doesn’t increase the floor area ratio, developers can get more out of a building by focusing on height as opposed to the total area of development. As a result of how important FAR is in commercial zones, many local governments spend a considerable amount of time making sure that the guidelines for developing in the zone are exhaustive.
When taking a look at industrial zones, the floor area ratio is rarely used and is much less important when compared to commercial and residential zones. Different plants will have different size requirements and aren’t typically located too closely to one another, which is why local governments focus more on how much of a nuisance the manufacturing processes cause. There’s also hardly any reason for industrial facilities to go higher than a single story.
As for residential zones, FAR has proven to be fairly important over the years. However, the usefulness of this ratio depends on how high the intensity of development is. In low-intensity areas, FAR isn’t that important. In comparison, high-intensity areas are similar to high-intensity commercial zones wherein land is costly, the total height of buildings is unimportant, and space is relatively limited.
Floor Area Ratio’s Impact on Land Value
While floor area ratio is a useful calculation when constructing nearly every type of building, there are also some limitations of this ratio, the primary of which centers around the impact that floor area ratio has on land value. In certain situations, it’s possible for a higher floor area ratio to cause property values to increase.
The property value increase only takes place in some scenarios. For instance, an apartment complex may be able to construct a building with more square footage, which allows the apartment units to be more spacious. Larger apartment units come with higher monthly rents, which allows the building owners to make more money.
On the other hand, developers who are able to construct sizable apartment complexes on one property could effectively lower the value of a nearby property in the event that the view from the property is now obstructed. These factors should be taken into account before you decide to rely solely on FAR guidelines.
How to Calculate Floor Area Ratio?
FAR is usually calculated by dividing the building’s floor area by the area of the lot that the building is being constructed on. There are times when land area and floor area can be measured differently in accordance with local policies and standards. However, the most basic calculation is typically the one that you should use.
The first step of this calculation involves identifying how much of the land is ready for construction. Keep in mind that it’s not legally possible to construct on every aspect of your property. Public streets, wetlands, and any right-of-way on your property wouldn’t be included in your calculations.
The next step in this calculation involves identifying the floor area for the building you’d like to construct. You can do so by measuring the space between any exterior walls. The final step involves dividing the total floor area by the land area, which will give you the floor area ratio for your property.
Floor Area Ratio: Additional Resources
If you’d like to learn more about floor area ratio, there are several resources available to you. For instance, you can gain a better understanding of the floor area ratios in Los Angeles by looking at a baseline ordinance document that was created about FAR by Los Angeles City Planning.
The Los Angeles code of ordinances should also provide you with the information you need about the exact FAR rules and regulations that are maintained in Los Angeles. You can check to make sure that your residential property adheres to FAR guidelines by looking at the plan check correction sheet that was created by the Los Angeles Department of Building and Safety.
If you’re still having difficulties calculating floor area ratio, you can learn more about this calculation by checking out these floor area ratio examples. Floor area ratio is an important calculation regardless of the type of building you’re set to construct. Before you get started on development, make sure that you understand what the local FAR limits are and how to properly perform these calculations.
Jason Somers, President & Founder of Crest Real Estate
With over 15 years of professional experience in the Los Angeles luxury real estate market, Jason Somers has the background, judgement and track record to provide an unparalleled level of real estate services. His widespread knowledge helps clients identify and acquire income producing properties and value-ad development opportunities.