How NYC Land Value Actually Gets Calculated

Number 1: Buildable Square Feet

Every lot in New York City has a legal ceiling on how much floor area can be built on it, set by its zoning district's Floor Area Ratio (FAR). Multiply the two together and you get the site's buildable square footage — the actual product a developer is buying.

Base FAR isn't the ceiling in every case. City of Yes added an as-of-right 20% bonus in most residential districts for buildings that dedicate the extra space to permanently affordable units, and Mandatory Inclusionary Housing districts carry their own bonus structures on top of that. Two identical lots can have meaningfully different buildable totals depending on which bonuses apply — see our rezoning guide for how to check.

Number 2: Price Per Buildable Square Foot

Once a developer knows how much can be built, they need a market benchmark for what that space is worth per square foot, based on recent sales of comparable sites nearby. This figure — $/BSF — moves constantly with the market and varies enormously by submarket and product type. As of recent 2025–2026 activity: Manhattan development sites have traded around $468/BSF on average outside of trophy deals, while Brooklyn land values reached a borough-wide average around $313/BSF, with individual assemblages trading as high as $450/BSF in strong pockets. See our condo land market guide for a fuller neighborhood breakdown.

Number 3: Residual Land Value

A $/BSF comp gives a ballpark. Sophisticated buyers go one step further and build a full residual land value model — starting from the revenue the finished building will generate, then subtracting every cost of getting there, to find what's actually left over for the land:

• Projected condo sellout or stabilized rental revenue
• Hard construction costs ($300–$700+/SF depending on building type and finish)
• Soft costs — architecture, engineering, legal, permitting (roughly 20–30% of hard costs)
• Construction-period financing costs
• Demolition of the existing structure, if applicable ($15–$30/SF)
• The developer's required profit margin (typically 15–25% of total project cost)

What's left after all of that is the most a rational buyer can pay for your land. This is also where tax incentives quietly do a lot of work: a project that qualifies for 467-m or 485-x carries a dramatically lower long-term tax bill than an unincentivized building — which raises projected net revenue and, in turn, the residual land value a buyer can justify. Two nearly identical sites can support very different offers purely based on which tax track the planned project qualifies for.

Number 4: Site-Specific Discounts

The math above assumes a clean site. Real sites rarely are, and every complication chips away at the final number:

• Rent-stabilized tenants: 30–60% discount versus an equivalent vacant lot, depending on unit count and tenure
• Transferred air rights: reduces the FAR a buyer can actually use, regardless of what zoning nominally allows
• Easements, antenna leases, environmental history, landmark status: each can meaningfully reduce — or in some cases eliminate — development value

Our development potential guide covers these in more depth — they're usually the difference between a site trading at full comp pricing and one trading at a steep discount to it.

Putting It Together: Land Value vs. Income Value

Once you have a residual land value figure, compare it against your property's income value — Net Operating Income divided by a market cap rate. Whichever is higher is your property's real highest-and-best-use value. For a lot of older, underbuilt buildings in strong development submarkets, land wins, sometimes by a wide margin. We walk through exactly that comparison, with a worked example, in multifamily land value vs. rent roll.