What Is a Penthouse Apartment?

Living in a penthouse comes with prestige, but does it have all the amenities you're looking for?

by ZeuCer

As most people understand it, the penthouse is the top floor of a high-rise or mid-rise building and the word generally connotes exclusivity and luxury. The penthouse may have the best views of any unit in the building, higher ceilings and may have a layout that is unique among all the other apartments. Its position at the top may mean that it has notable private outdoor space or access to private roof space, and depending on the construction, it may have a larger or smaller footprint overall.

With all of this in mind, should a buyer be willing to pay more for the penthouse than any other unit in the building? And are there drawbacks to being “the nicest house on the block” in a building?




What Should Buyers Know About Penthouses Before Purchasing?

Generally, units in high-rise buildings have “better views, better light and therefore a higher value per floor as they go up,” says Nick Libert, founder, CEO and coach of EXIT Strategy Realty in Chicago, as well as host and executive producer of “Selling Chicago,” a monthly TV show on the Travel Channel. “In certain buildings, the top floor might be designed with a foot or more of extra ceiling height, bonus features and amenities, or upgraded finishes. And there are no noisy neighbors above the penthouse, further distinguishing its advantages from lower floor units.”

Danny Hertzberg of the Jills Zeder Group at Coldwell Banker Residential Real Estate in Miami, says, “The penthouse is usually considered the premier and most exclusive floor of a residential buiding.” But, he adds, “not all penthouses are created equal. Though the actual top floor is considered the true penthouse, in many buildings there might be multiple units on the top floor. Some buildings even have several floors designated as the penthouse level, since developers have taken note of the premier pricing for the prestigious “PH” designation. As a result, many buildings often have multiple penthouse levels when launching a project. If there are multiple penthouses in a building (and they don’t have) special features, then they are penthouses in name only, and the price will be impacted accordingly.”

During the escrow period or prior to signing a contract to purchase a penthouse, a buyer would be wise to hire a home inspector or have a real estate attorney do proper due diligence to learn when the roof was last replaced. An engineer’s report or expert opinion regarding the roof’s condition would be valuable information to avoid costly structural repairs over time.

What Should Owners Beware of Living in the Penthouse?

Though the penthouse label comes with prestige and often an inflated price tag, weather-related concerns may accompany living on the top floor of any high-rise building. Yes, the top floor of the building has the luxury of no upstairs neighbors. Still, the roof is right above the penthouse ceiling, closest to leaks or cracks from repeated exposure to precipitation and seasonal changes in humidity.

In New York City, for example, many real estate agents advise their clients that the most valuable apartments are actually those just one floor below the penthouse because these units are more shielded from the elements. The views and light are almost as good, but with a buffer of not being directly below the roof. If the penthouse is just under the roof, an owner should be prepared for leaks over time.



Aside from additional exposure to harsher weather like strong wind on higher floors, the carrying costs to own a penthouse unit might be higher than any other apartment in the building.

In New York City co-operatives, the monthly maintenance – the equivalent of a homeowners association fee – is determined for each apartment in the building by the number of allotted shares in the corporation. Larger apartments and those on higher floors tend to have the most shares, as they are generally considered the most valuable and desirable units in the building.

As a result, the monthly fees to live in a sprawling penthouse with private terraces might be the highest in the building. Private outdoor space will add to that. Similarly, in New York City condos, the common charges and real estate taxes might also be the highest in the building for the same reasons of proportionate value.

Furthermore, if the building takes on expenses like facade work or other structural repairs, the cost might be allocated among the shareholders or unit owners based on their proportional ownership, thus weighing most heavily on the penthouse.

Penthouse owners should be careful not to get carried away when renovating a penthouse, even with the value premium the unit may carry. “Should an owner of a penthouse unit decide to customize their home beyond the scope of what is done by their neighbors, they may find themselves ‘overimproved’ and not able to fully monetize the work done for some time,” Libert says.

Even though many real estate agents and appraisers consider penthouses to be in a league of their own and some won’t consider non-penthouse units to be reliable comps when assessing value, a penthouse unit is still characterized by the quality, or lack thereof, of the building it sits atop, and return on investment should always be considered.

What Are the Advantages of Selling a Penthouse?

The market performance of any residential property for sale, penthouse or not, will be impacted by current market conditions. That said, a penthouse (and its PH designation) holds exclusivity and prestige, often commanding a premium price in comparison with the rest of the market.

“On a plane, there is coach, business class and first class,” Hertzberg says. “A penthouse is the first-class equivalent due to the exclusivity, privacy and premier position. You might even say it’s like flying private, as a penthouse is often in a class of its own and sells for a higher price-per-foot than other apartments in the same building.”

While you can renovate and upgrade any home, you can’t create views and light if they’re not there already, especially in a densely populated city. There is something peaceful about panoramic views that a penthouse delivers better than any other type of unit, irrespective of condition.

“Scarcity is a primary driver in real estate and penthouses are the rarest of apartments,” Hertzberg says. “Some of the wealthiest buyers will only look at penthouses and are more than willing to pay a significant premium to obtain their ultimate home in the sky.”

Libert adds: “The owners of a penthouse unit have a superior marketing advantage. They’re selling an incomparable quality of ‘life in the clouds.’”



Buying, owning or selling a penthouse comes with its own set of pluses and minuses compared with the rest of the market. For many future or current homeowners, the advantages generally outweigh the drawbacks, but savvy investors should research and understand those drawbacks and act accordingly, understanding their own budget, as well as current market conditions.

Source: https://realestate.usnews.com/real-estate/articles/what-is-a-penthouse-apartment

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