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.

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:

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: