Price per buildable square foot is what you're paying for land based on how much you're allowed to build on it. To calculate it, take the purchase price and divide it by the allowable square footage. Development sites are priced differently depending on the neighborhood, because zoning across NYC controls how much you can build. Some zones are denser; others are less dense. Understanding price per buildable square foot tells you what the land is worth, and it's a good way to compare development sites. A common misunderstanding is that people confuse lot size with buildable square footage. A lot size of x square feet doesn't mean you can build x square feet. Your FAR — which depends on what zone you're in — determines how much square footage you can build on top of your lot.

Example: You have a lot size of 1,800 sf, your residential FAR is 5, and the sale price is $1,500,000. First, find your buildable square footage: 1,800 × 5 = 9,000 sf. Then divide the purchase price by that number: $1,500,000 ÷ 9,000 = $166.67 per buildable square foot.