Redevelopment potential refers to a property's capability to be updated or completely rebuilt to maximize its FAR, change its use (office to residential, for example), or convert it to its highest and best use.

There are four major factors that determine if a property has redevelopment potential: FAR availability (what is built vs what zoning permits), lot size (A developer would need a large lot to build an efficient building), location (neighborhood, zoning, proximity to transit), and the existing structure.

In NYC, where vacant lots are scarce, redevelopment potential almost always means replacing or building above an existing structure rather than building on empty land, making the ability to identify underbuilt properties one of the most important skills. Developers screen for underbuilt properties systematically, before ever contacting an owner, by filtering on four criteria: FAR utilization ratio, lot size, the existing structure vs land value, and location.

For owners, redevelopment potential determines whether a developer will pay land value rather than the value the current building brings

Many owners may think that people would buy their properties for the existing structure, but the land value might be more valuable as developers could be able to build much better structures on their lot.

Example: An 8,000 SF lot zoned R7A has an FAR of 4.0, supporting 32,000 buildable SF. The existing three-story building contains 9,600 SF, 30% of what's allowed. A developer could be interested in purchasing this property and building it to its full potential.