Correlation Between FARs and Building Heights in New York City

In my last post, where I modeled the real estate growth potential of Manhattan, I alluded to Floor-Area Ratio (FAR) as a metric not just for square foot growth potential, but also for height. I showed how FAR is related to height, but explained that there are many other constraints on height in the zoning code, so it isn’t a perfect metric.

That led me to wonder if there is truly a correlation between building height and the FARs allowed by the zoning code. I assumed there was (because the zoning code states as much), but there’s never any harm in checking the data. It’s always possible that the actual outcome of a policy deviates from the intended outcome.

So I dove into New York City’s data (courtesy of PLUTO) and, to no surprise, found that a strong correlation does exist.

As Allowable FAR increases, average # of floors increases too.
As Allowable FAR increases, Average # of Floors increases too.

The above chart plots, for both residential and commercial buildings, the average number of floors per building (numfloors in PLUTO) within the different possible allowable FAR buckets as dictated in the zoning code (residfar for residential & commfar for commercial).

You can see that the graph trends upwards. Higher allowable FARs have, on average, taller buildings. This makes perfect sense because you can’t build a tall building if you don’t have a lot of floor area available to utilize.

Of course, this general outcome was expected. The New York City Zoning Resolution purposefully puts high FARs on areas where it wants to allow taller buildings.

But it’s interesting to note that the correlation is not perfect. Look what happens if we segment the commercial building data into three buckets:

The data for commercial buildings shows three distinct buckets.
The data for commercial buildings shows three distinct buckets.

You can see that zones with maximum allowable FARs from 1 to 3 don’t seem to grow in an orderly fashion. Zones with maximum allowable FARs from 4 to 8 all have about the same average height. I would think a zone with an FAR of 8 would have much taller buildings than a zone with an FAR of 4, but that doesn’t appear to be the case. From this analysis, I can’t answer why, but it’s worth looking into.

What’s really interesting to me is that building height growth takes off going from FARs of 8 to FARs of 10 and up. On average, an FAR of 10 spawns buildings twice as tall as an FAR of 8, even though that’s only a 25% increase in FAR. There have to be some other factors encouraging this type of growth.

This is all important to know if I’m a real estate developer. At face value, an FAR of 8 doesn’t sound too different from an FAR of 10, but the data shows that there can be a huge difference in terms of building height. Who knew? I guess it’s because of tower regulations, but I haven’t looked into those too much (yet), so I can’t say definitively.

Gotta run!

Summer intensives just started at NYU, so I’m short on time this weekend and have to cut out here, but know that there is more to come on this subject. In my next article, I’ll be diving into further detail about which zones produce the tallest buildings and what that means for real estate developers.

For reference, the data I used spans the entire island of Manhattan:

The data for this analysis contains all of Manhattan.
The data for this analysis contains all of Manhattan.

Identifying New York City’s Biggest Real Estate Development Targets

Many real estate developers dream about making their mark on New York City’s skyline. Building big creates a legacy that can be seen miles away. From a business perspective, height creates value and a sustainable competitive advantage. Views from the clouds command equally stratospheric premiums and only a few buildings can give prospective buyers such views.

The reasons why developers want to build big buildings are obvious, so how do they identify the sites where building big is possible?

In this post, I will examine a model I built, with the help of a few handy tools such as Carto (previously CartoDB) & NYC PLUTO, that outlines the real estate growth potential of New York City and helps identify the biggest possible development sites in the city.


I said I will model New York City, but I am only modeling Manhattan south of Central Park. I understand that New York City extends beyond Manhattan. Likewise, the methodology discussed henceforth extends beyond the data set I used. Please do not hurt me.

Background Information

The basis of this article is a project I did at NYU Stern for Urban Systems, a real estate class taught by Paul Romer. (A second disclaimer: Paul’s personal blog is the inspiration for my own.) In this class, we were challenged to ask questions about cities, perform quick analyses, and come up with general solutions. That is the methodology I will use here. This model is not intended to be a comprehensive review on any individual property. It is intended to paint broad strokes over the city in regard to real estate development potential.

Let’s start!

While I’d love to be able to quickly judge which sites can grow the tallest, height is a function of a number of zoning code components such as tower regulations, setback requirements, air rights, special district privileges, etc. Modeling all of that is too complex for now. A quicker way to get a feel for the development potential of any site is reviewing its Floor-Area Ratio (FAR).

A primer on Floor-Area Ratio (FAR)

Floor-Area Ratio is how a real estate developer determines the total floor space a building can have on any given plot of land.

For example, let’s take a lot that is 100′ wide by 100′ long. That lot has 10,000 SF of area. Assume the zoning code states that lot has an FAR of 5.0. Multiply the lot area by the FAR and you get 50,000 SF of total floor space that can be developed. This total is usually called ZFA, or Zoning Floor Area. It’s your floor space limit.

Simple enough, right?

The other important concept is that the Zoning Floor Area can be molded however you see fit (within the bounds of the zoning code). You can build a building with 5 floors on a 10,000 SF footprint using the entire site, you can build a building with 10 floors on a 5,000 SF footprint using half the site, or you can build any other combination as long as the total floor area of the building does not exceed 50,000 SF. The NYC Zoning Code Glossary has a nice picture to hammer home this concept:

Floor area can be divvied up however you see fit.
Floor area can be divvied up proportionally.

This picture also shows how FAR is related to height. Tall buildings need high FARs because tall buildings have a lot of floor space, but FAR isn’t a perfect metric for height because there are other constraints on height. I would certainly bet that there is a correlation between height and FAR, but I have never done a study. Maybe one day…

But I digress. Now that we’ve gone through Floor-Area Ratio and Zoning Floor Area, we have to figure out which properties have the most potential. For that, it’s best to jump into the model.

Building the Model

Every good model starts with great data. Thanks to New York City’s Open Data Plan, which provides that the city must release a ridiculous amount of data to the public, real estate developers with an eye for data analytics have access to tons of great data.

The specific data we need comes from PLUTO, Property Land Use Tax lot Output, which is aggregated by New York City. PLUTO contains zoning information, square footages, building types, tax values, dimensions, and a host of other fields all the way down at the individual lot level indexed by geocodes. This means we can put this data on an actual map!

My favorite tool for getting a handle on PLUTO Data is Chris Whong’s PLUTO Data Downloader. You can select an area, download the data to a CSV file, and import it right into Excel.

Once the data is in Excel, it’s easy to build in metrics. I focused on a few key fields:

lotarea: Area of the lot
Total building area / lotarea
Maximum allowable commercial FAR
Maximum allowable facility FAR
Maximum allowable residential FAR

New York City provides a handy data dictionary if you want more detailed definitions about the various fields.

Using these fields, I came up with a metric I call “Square Foot Growth Potential,” or SFGP. Conceptually, SFGP is the difference between the square footage of floorspace a building currently has and the square footage of floorspace the lot can support as dictated by the zoning code.

For example, if a 10,000 SF lot with an FAR of 5.0 currently has a building with only 15,000 SF of floorspace–equivalent to a built FAR of 1.5–then the Square Foot Growth Potential is 35,000 SF.

Mathematically, SFGP is defined as such:

SFGP = ( Allowable FAR – Built FAR ) * Lot Area

We already have the Built FAR (builtfar) and Lot Area (lotarea), but we don’t have one field for Allowable FAR. We have three: commfar, facilfar, and residfar. To be conservative, I assume the Allowable FAR is equal to the lowest FAR contained in those three fields.

Note that I’m only running this calculation on properties where Allowable FAR is greater than Built FAR. For this exercise, I don’t care about buildings that are somehow larger than what the zoning code allows (via transfer rights, FAR bonuses, etc.). Additionally, I don’t factor in any FAR bonuses beyond what is already in the data.

That’s all that needs to be done to identify targets with high growth potential, but that alone won’t provide anyone with anything useful. There is too much noise. We need to filter it out.

Filtering Out the Noise

The data from PLUTO includes every tax lot in New York City. That means prime development targets like apartment buildings, vacant lots, and gas stations, but it also means public parks, schools, hospitals, government facilities, and other buildings that would be very difficult to develop. Additionally, some buildings are landmarked or located in historic districts. The following fields help us account for these factors:

bldgclass: Building class codes
 Historic district
landmark: Landmark
ownertype: Tax lot ownership type

Building class codes allow us to distinguish between the different types of buildings. There are over 200 different categories and subcategories ranging from bungalow-style one family dwellings to outdoor pools to orphanages. A full list of the building codes is available in Appendix C of the data dictionary.

I excluded over 80 building codes from my analysis including, but not limited to:

  • Luxury hotels and dormitories
  • Hospitals, infirmaries, and nursing homes
  • Churches, synagogues, and convents
  • Asylums, orphanages, and detention centers
  • Concert halls, museums, and libraries
  • Parks, playgrounds, and public pools
  • Airports, piers, and docks
  • Utility facilities, transportation infrastructure, and railroads
  • Various government-owned land types
  • Schools, colleges, and seminaries
  • Court houses, post offices, and cemeteries

You can see that the building codes contain a great deal of valuable information that helps us hone our analysis.

Next, I factored out any property that is within a historic district or deemed a landmark.

Lastly, I factored out any lot with an ownertype of ‘O’ or ‘C’. An ownertype of ‘C’ means the lot is owned by the city. An ownertype of ‘O’ means the lot is owned by a public authority, state, or federal government.

All of this checking is an attempt to weed out properties that, in reality, would be significantly more difficult to redevelop than your standard, privately-owned townhouse, apartment, or office building.

The End Result

After downloading the data, building the metrics, and cleaning things up, the dataset is ready for use.

As I mentioned before, this data is geocoded, so we can easily plop it onto a map. That’s where Carto becomes extraordinarily valuable.

Using Carto and geocoded data, we can turn an Excel model into a map and visualize the analysis I outlined above. For your viewing pleasure, I filtered the map to include only lots with over ~20,000 SFGP.

Here’s what the final product looks like:

If you browse around the map, you’ll be sure to notice some of the most well-known recent developments like 432 Park (zoned as 53 East 57th Street), boasting 252k SFGP, and forthcoming 80 Essex (part of Essex Crossing), with 130k SFGP.

You might also discover some sites that you didn’t know were in the works. I didn’t know Silverstein is looking to develop 514 11th Avenue, which we model at over 800k SFGP, into a super-tall tower until this model highlighted that property. (Turns out Silverstein may back out, though.)

What interests me most are the underdeveloped sites in prime locations. For example, our model tabs 420 7th Avenue at 133k SFGP and the site is heavily trafficked next to Madison Square Garden, but the building appears to be a one-story Bank of America/Modell’s according to Google Maps.

+130k SFGP in the heart of New York City.
Over 130k SFGP in the heart of New York City.

I wonder what’s going on with that…

Closing Remarks

As you can see, PLUTO + Carto can be a very powerful combination for real estate developers. Building this model only took a couple hours of work, but it provides me with the ability to scan the entire city and find opportunities with high growth potential visually. Adjusting Carto filters on SFGP, lot dimensions, and number of floors further enables me to pinpoint buildings of interest.

As I continue exploring real estate and New York City, I’m sure I’ll be diving into things I discovered from this simple tool. I hope it piques your interest as much as it does mine.

Setback Basics in the New York City Zoning Code

The New York City Zoning Resolution is a 3,917 page monster. Naturally, that can be both good and bad. On the bad side, you need a battalion of lawyers to understand it. On the good side, because of its complexity, the code is a tool through which creative developers can identify smart investments, differentiate properties, and create value.

One of those complexities is building setbacks. In this post, I will walk through the basic structure of specific setback requirements as dictated by the New York City Zoning Resolution and examine what they mean from a real estate development perspective.

Setback regulations force developers to push their buildings backwards as the buildings grow in height, similar to the tiers on a ziggurat or a wedding cake. Setbacks were mandated to ensure that streets didn’t suffocate between parallel rows of vertical towers and that sunlight could make its way down to the ground. If you keep your eyes open, you’ll notice setbacks everywhere.

The Paramount Building at 1501 Broadway is known for its setbacks.
The Paramount Building at 1501 Broadway is known for its setbacks.

The Paramount Building is a showcase for setbacks. You can very clearly see the tiers at the top and how the developable space was tapered back as the building grew in height. This is not just what setbacks are, but also why they are so important. They are one of the key factors in defining how buildings can grow, how space can be utilized, and how a property can be developed.

So, how do building setbacks work?

Unfortunately, there is no one cut-and-dry answer. To simplify things, I will focus on the following zoning code section and residential zones because I believe this section best represents the general concept & mechanics of setbacks:

Section 23-641
Front Setbacks
Zones R6, R7, R8, R9, and R10
(Page 378 in the NYC Zoning Code)

In the districts indicated without a letter suffix, if the front wall or other portion of a #building or other structure# is located at the #street line# or within the #initial setback distance# set forth in the following table, the height of such front wall or other portion of a #building or other structure# shall not exceed the maximum height above the #street line# set forth in the table. Above such specified maximum height and beyond the #initial setback distance#, the #building or other structure# shall not penetrate the #sky exposure plane# set forth in the table, except as otherwise provided in Sections 23-62 (Permitted Obstructions) or 23-65 (Tower Regulations).

This is how lawyers say the front of a building can only be a certain height and then the building must taper back.

The code has a nice picture to explain the requirement:

The Setback Concept: An initial height followed by a sloping boundary.
The Setback Concept: An initial height followed by a setback.

Then the code presents a table which outlines all the key variables and constraints:

The key variables for building setbacks.
The key variables for building setbacks.

The first thing you’ll probably notice is how ugly the table is. Move past this.

The second thing you’ll notice is that the variables are split depending on zoning. The top row is for R6 and R7 zones while the bottom row is for R8, R9, and R10 zones, but the only differences are with regard to the height of the front wall and the starting point of the sky exposure plane. The sky exposure plane slope and setback requirements are the same.

The third thing you’ll notice might be that it presents the same data twice–once for narrow streets and once for wide streets. What does that mean?

A “narrow street” is any #street# less than 75 feet wide.
A “wide street” is any #street# 75 feet or more in width.

This distinction is made to allow taller buildings on wider streets via steeper setbacks.

Depending on the width of the street the lot touches, you have to abide by the correct set of rules.

The fourth and last thing you’ll notice are the variables defined (from left to right on the table with variable names from the picture):

s = Initial setback distance (in feet)
Maximum height of a front wall
Sky exposure plane
h = Height above street line (in feet)
v = Vertical distance
a = Horizontal distance

Let’s dive into these variables and terms.

Initial setback distance
The initial setback distance is the minimum distance that the building must be pushed back once the building is as tall as the maximum height of the front wall. It’s worth noting that you can set the building back from the get-go or do small tiers on the way up (before hitting the maximum height of the front wall) if you desire. (It’s also worth noting that for these zones there are alternative setback regulations that can apply if a building uses a setback from the ground up. I will not be addressing those here.)

Maximum height of a front wall
The maximum height of a front wall is the tallest the front wall can be built before it must be pushed back by the initial setback distance.

Sky exposure plane
The sky exposure plane is like an invisible wall that defines the area under which your building must fit. Unless you are constructing a tower or using another exception (of which there are plenty), your building cannot break through the sky exposure plane.

The sky exposure plane explicitly limits the height of your building and defines how your building must be set back, so the location of the plane is extremely important.

Sky exposure plane height above street line
This is the bottom starting point of the sky exposure plane as it pertains to your lot. Regardless of how your building is built, the sky exposure plane always starts at this height directly above the street line.

Vertical & horizontal distance of sky exposure plane
These variables dictate the slope of the sky exposure plane starting at the sky exposure plane height above the street line. For every ‘v’ units moving up (vertically), the sky exposure plane is pushed ‘h’ units back (horizontally) from the street using the numbers shown in the table above.

What does this all mean? Let’s do an example.

First, we always start with our assumptions:

Zone: R7
Street Width: Narrow
Lot Area: 1,000 SF (25′ wide x 40′ deep)

Next, we’ll map out our setback variables according to the table above based on our assumptions. Remember, the only determinants of the setback variables are zone and street width, R7 and narrow.

s = 20′ = Initial setback distance (in feet)
60′ = Maximum height of a front wall
h = 60′ = Height above street line (in feet)
v = 2.7 = Vertical distance
a = 1 = Horizontal distance

To help visualize the sky exposure plane, I like to calculate what I call the top of the sky exposure plane. The code tells us where the plane starts (‘h’). This variable, ‘t’, tells us how high up the plane ends using our lot depth:

th* ( Lot Depth) = 60′ + 2.7 * ( 40′ / 1 ) = 168′

I find this easier to comprehend than the slope figures ‘v’ and ‘a’ alone.

Additionally, to help visualize building potential, I calculate the initial setback vertical effect. The code defines our first setback requirement. This variable, ‘i’, tells us how tall we can build directly after that setback.

Another way to look at it is it’s the vertical line that takes us from the sky exposure plane height above the street line up to the sky exposure plane after setting back by the initial setback requirement.

i = h* ( s / ) = 60′ + 2.7 * ( 20′ / 1 ) = 114′

With these two additional variables you can get a pretty good feel for how tall the building can be.

Finally, we can take a side view of our lot and draw out the boundaries under which the building must lie as dictated by the setback requirements. These boundaries are the red lines:

Plotting our setback requirements from a side view.
Plotting our setback requirements from a side view.

And there you have it. Exceptions aside (dormers, towers, etc.), the building you build must be contained underneath the red lines according to the setback regulations in Section 23-641 of the New York City Zoning Resolution.

What does this mean for real estate development?

In order to get height on your building within a setback zone, you need to be able to build up and back while maintaining enough space for livable apartments.

The implications of setbacks on developing residential real estate are therefore most substantially felt when dealing with lots that are not particularly deep, especially with respect to the initial setback distance. From a regulatory perspective, a site might have room to grow, but, in reality, the building might be limited to just the height of the front wall if the depth and setback requirement mix does not fit well.

For example, a lot that is 35′ deep on a narrow street might seem to have good depth, but because the initial setback requirement is 20′ and you would need space to construct the building and its elevator, the remaining 15′ of depth might not be enough space to build apartments. That could mean available space is under-utilized.

In this over-simplified situation, an extra 5′ of lot depth could actually be the difference between a few floors of apartments plus a penthouse and nothing.

Of course, this type of analysis would need to be done on a case-by-case basis.

Closing Remarks

Hopefully this wasn’t too dry and you now have a basic understanding of the way certain setback requirements work under the New York City Zoning Resolution.

Lastly, as I’ve mentioned a few times in this post, please be aware that this post is not meant to cover everything related to setbacks. It’s not even close. There are numerous alternatives, exceptions, and exemptions that enable smart real estate developers to get around setback requirements. I’ll be diving into these topics in the future.