The FAR is the relationship between the total amount of usable floor area that a building has or has been permitted to have and the total area of the lot on which the building stands.

### How is FAR calculated?

FAR is calculated by dividing the total or gross floor area of the building by the gross area of the lot. A higher ratio is more likely to indicate a dense or urban construction. Local governments use FAR for zoning codes.

**How Is FAR different front square feet?**

FAR is a floor area ratio for the entire floor area of a building. That includes elevator shafts, hallways, basements, parking garages, stairs. These are not included in a square foot calculation which is just the livable area.

**What does the FAR tell us?**

FAR tells us what type of a neighborhood a building is in. An area with a higher ratio is likely to be dense or highly urbanized area.

**How is FAR used in real estate?**

FAR is a zoning tool used by cities to establish the size of buildings. A low FAR limits construction. A high FAR allows for more contruction — and higher density. When an area’s FAR is adjusted through a zoning change, developers can increase the size of buildings.

**An example of how to use FAR**

The FAR of a 1,000-square-foot building with one story situated on a 4,000-square-foot lot would be 0.25. A two-story building on the same lot, where each floor was 500 square feet, would have the same FAR value.

As a more specific example, an apartment building is for sale for $4 million. It occupies 20,000 square feet. The entire lot is 2 acres or 87120 square feet. The FAR is 20,000 divided by 87120. So the FAR is 0.23.