Also called the Floor Area Ratio (FAR), Floor Space Index (FSI) refers to the ratio of developed floor area to the total area of raw space on the land where the establishment sits. This real estate metric is used by developers and owners of commercial real estates in order to determine if a particular lot or property has a high capacity to generate revenue. When a lot has a high area ratio, it means that there will be a greater floor area that is available for selling or renting to tenants. With this, the Floor Space Index can be used to determine the economic viability of a property.

In addition, the Floor Space Index is also used for municipal zoning laws. They set the ratio to a specific range in order to prevent congestion in a particular area. This is not only used to regulate the amount of construction of new buildings, but also to limit the size of establishments as well. For instance, when a new establishment is built in a congested area and zoned with a low Floor Area Ratio, the one who designed the building needs to leave a large amount of open space in that piece of land. This would somehow ensure that there will be enough parking space and the people in the area will not be troubled by cars parked on the sides of the street.

Calculating for the Floor Space Index of a building is pretty simple. All you have to do is to divide the developed floor space of that structure by the total area of the lot. For instance, a 100 square meter building that is built on a 200 square meter lot has a 0.5 Floor Area Ratio. Likewise, an establishment with five floors that are 20 square meters each would also have a 100 square meter floor space, and if this is built on a 200 square meter lot, the ratio would also be 0.5.