In order to better understand the territory size distribution of the Formosan subterranean termite (FST) colonies in bounded space, we proposed a two-dimensional lattice model using minimized local rules based on empirical data that determines the development of colony territory. Seasonal cycle (summer and winter) and complex man-made structures such as building and asphalt pavement derived from the empirical data were incorporated in this model. We applied this model to examine its validity to FST colonies in the bounded space of Louis Armstrong Park in New Orleans, LA. The comparison of the model prediction vs. the observed territory size distribution showed very similar trends, two slopes categorizing two territory groups (growth- strongly inhibited or -less inhibited), in a maximum size-normalized scale. The trends arose from two reasons: (1) if a founding pair was surrounded by sites with poor environmental condition at the beginning of the simulation, its growth was inhibited but otherwise, it was likely to grow to be large, (2) when territories compete with each other at boundaries they bordered to occupy empty sites, winners became larger than loser. The results supported that our model can be a useful tool for understanding territory size distribution as well as territory competition dynamics.