Is there any type of housing more "aspirational" than the penthouse? That top-of-the-building apartment has been considered the creme de la creme of city real estate since the advent of the elevator. But is it all it's cracked up to be?
That depends on whom you ask. "There’s a group of people who say they love the idea of a penthouse, but since they have a Hamptons house or a house somewhere upstate with plenty of outdoor space, they just don't need [the private outdoor space that often draws people to penthouse apartments]," says Leonard Steinberg, president of Compass. "But, still, for a lot of people, the 'penthouse premium' is worth every penny."
(This post originally ran in October 2016.)
We caught up with a handful of experts to find out both the pros and cons of living in a penthouse apartment.
First, the pros:
- That indescribable feeling. Of course, there's the prestige and "sense of arrival," that comes with being able to live in a penthouse, says Steinberg. "There's always something nice about hitting that PH button."
- Some peace and quiet: Penthouses are quieter than other apartments for a couple of reasons—first, they're further from the street noise below, and second, because you don't have any upstairs neighbors. No need to stress about clackety high heels interrupting your peaceful sleep.
- Penthouse-only perks. Unobstructed views, lots of light, higher ceilings, elevators that open directly into the apartment and private outdoor space are common—and often de rigeuer—in penthouses. Plus, "penthouses usually have better layouts than the other, lower-floor apartments," says Anna Karp, co-founder of Bolster, a company that connects homeowners to renovation professionals (FYI, it's also a Brick Underground sponsor). Overall, it's the "uniqueness" of a penthouse that is its main draw, says Jonathan Miller of appraisal firm Miller Samuel. "Penthouses often have amenities that the rest of the building may not have, like private and large outdoor spaces, fireplaces and more."
- Customization: Oftentimes, says Karp, the ability to customize a penthouse—to build up and out—is what sets it apart. She is currently working on a project with a client who's building a private shower on her outdoor space. "Being able to use the outdoor space exactly how you want is really special," she says. And if the building hasn't sold its air rights, there's often a chance to expand a penthouse upward.
- Less market volatility: For all of these reasons, on average, penthouses tend to sell for about 5 to 10 percent more than non-penthouse apartments. And they also tend to be less affected by market volatility as a result, says Miller.
- That is, as long as they truly are penthouses: These days, a "penthouse" isn't always a penthouse. Some new constructions launch their projects with several penthouses (often designated penthouse A, penthouse B, and so on). "Those are more of a marketing ploy," says Miller, an attempt to make an apartment seem more desirable. And in those cases they're not necessarily worth much (or even any) more than other apartments in the building. Karp suggests checking out other apartments in a building before buying a penthouse just to ensure that the premium price you're paying is getting you something that's actually out of the ordinary.
Now, for the cons:
- Leaks—and extreme weather of all sorts: "You're just much more susceptible to the elements, like water damage, when you're living right beneath the roof," explains Miller. And depending on the insulation of said roof, a top-floor apartment can be colder or hotter than other apartments, says Steinberg. Miller says he's been called in to testify in plenty of court cases that involved leaks coming in and out of a penthouse (more on that below). Jeff Schneider of insurance brokerage Gotham Brokerage (also a Brick sponsor) concurs that "storm damage to the roof or ice damming are a bit more likely [in a penthouse]. And if you have an overflow, you also have more floors below you to damage." (Note: There are no insurance surcharges for proximity to roof or elevation.)
- About that outdoor space: "Landscaping requires a lot of maintenance," says Steinberg. "Remember that you need to keep plants that can survive temperatures from -5 to 105 degrees." And don't forget about the winter, either. Where exactly do you put the snow that accumulates on your terrace? "Ordinary maintenance is the responsibility of person who lives in the penthouse," explains attorney Steve Wagner of Wagner Berkow (a Brick Underground sponsor). And you can't push it off the roof when you have two feet of snow up there. "And what happens when it melts and some of the snow is now ice and blocks the path to the roof? These are all serious issues," says Wagner.
- Unusual foot traffic woes: When it's time for a building to do facade or roof work (and with Local Law 11, that's every few years), guess whose apartment workers are likely going to have to go through to access those spaces? That's right: The penthouse.
- Litigation/building fights: "When you’re buying a penthouse in a newly constructed building, in particular, there are often disputes as to what the penthouse owner owns and doesn’t own," says Jeff Reich, an attorney with Schwartz Sladkus Reich Greenberg Atlas LLP. "The outdoor space specifically can be a problem, and that may not be well defined; it may at some point lead to disputes," he says, especially if the board feels as thought he penthouse owner is using space that is actually a common area, or vice versa. Wagner says that, overall, he sees more litigation involving penthouses than other apartments. There are the issues of leaks, of course, he says, and who's responsible for them. But there are also plenty of lawsuits that come out of how penthouse owners use their coveted outdoors spaces. "You need to make sure everything you put up there is legal and doesn’t disturb people below," says Wagner. For example, when it comes to decorating outdoor space, the standard limit is 40 pounds a square foot. "Co-ops and condo have a right to regulate those things," says Wagner.
- Added costs and challenges of renovating: Let's say you want to build up or out. That's going to cost you, usually both in terms of stress and money. "The fact that you buy a penthouse apartment doesn’t include with it the right to enlarge an apartment or to use up the building’s development rights. You need the permission of the board, of course, and development rights are worth hundreds of dollars per square foot," says Wagner. When it comes to renovations, both outside and inside, you have seasonality working against you, too, says Bolster's Karp. "You're more exposed. If you're going to be storing things on the roof or terrace, they need to be taken off before it starts snowing. And if workers are going to need to get access to the apartment through the roof or any other oudoor space, they need to have the right weather for that. Transporting materials up to a top floor can be more expensive, too, especially if the elevator doesn't go all the way there, and the only way up to the roof, for example, is through interior staircases," she says. Adds Karp: "If you are buying an older penthouse apartment, especially, with the hopes of making into this super luxurious indoor/outdoor experience, you need to make sure the costs, and the co-op board's rules, don't make that prohibitive."
- Safety issues: Karp points out that in the case of a medical emergency or a fire, it will take longer for paramedics and firefighters to get to the top floor.
- Practical issues: While they're certainly not life threatening, there are some practical downsides too. "It takes longer to get downstairs in the elevator, especially during morning rush hours," says Karp. Another consideration: In the newer, especially tall buildings, many residents report cell phone service issues.
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