Floor Area Ratio (FAR)
Total building floor area divided by site area — zoning's density dial. A 0.5 FAR on a 10,000 sq ft lot permits 5,000 sq ft of building. Unused FAR can represent development potential and value.
Related Terms
Zoning
Local government regulation of land use — districts that control permitted uses, density, height, setbacks, and lot requirements.
Land-to-Building Ratio
Site area divided by building area.
Highest and Best Use
HBUThe reasonably probable use of a property that results in the highest value, considering uses that are legally permissible, physically possible, financially feasible, and maximally productive..
More in Land & Site Valuation
View allAllocation Method
A land valuation technique that estimates land value by applying the typical ratio of land value to total property value observed in the market.
Extraction Method
A land valuation technique that estimates land value by subtracting the depreciated cost of improvements from the total sale price of an improved property.
Land Residual Technique
A land valuation method that estimates land value by capitalizing the net income remaining after deducting the return attributable to the improvements from the property's total net operating income..
Ground Rent Capitalization
A land valuation method that estimates land value by capitalizing the ground rent (the rent paid for the use of land only, without improvements) at an appropriate capitalization rate..