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How to Calculate the Land to Building Ratio

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A structure occupies a certain portion or percentage of the land parcel on which it sits. This percentage or ratio of the size of the building to the land on which it resides is called the "land to building ratio."

To arrive at the land to building ratio, just divide the square footage of the land parcel by the square footage of the building:

188,000 land sq ft / 43,500 building sq ft = 4.32

This is a 4.32:1 land to building ratio.

The land to building ratio isn't reported in all appraisals. In fact, it is rarely seen in residential appraisals. There are, however, many municipal codes and property restrictions that will limit the ratio. In other words, there may be a desire to keep the size of homes to a certain percentage of the available lot space.

The use of the land to building ratio is much more prevalent in commercial and industrial applications. There are usually stringent requirements in building codes for the amount of parking for certain size structures, as well as setback and green area considerations. A facility with an 11 to 1 land to building ratio may be under-utilizing the land, resulting in some added value for additional space. Another, with a ratio of 2.5 to 1 may be at maximum capacity or in violation of current codes due to grandfather clauses.

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