Top Floor or Penthouse?
Once upon a time – and not so long ago – the penthouse represented the pinnacle of achievement, the ultimate status symbol, the domain of the elite few who’d truly made it to the top… and the apex of the American Dream. In the immortal words of the hip-hop artist Drake, “Started from the bottom now we’re here.”
While the dictionary’s definition of penthouse may simply be an apartment on the roof or the top floor of a building, the word has come to symbolize so much more. The idea of the penthouse began in the 1920s, when a surge of post-War economic growth heralded a construction boom in New York and the city’s newly minted wealthy wanted luxurious apartments that set them apart from the masses living closer to the street level.
Fast forward almost a century later, and the term “penthouse” has lost at least a touch of its gilded luster. What was once the exclusive purview of the elite has now become almost commonplace, both when it comes to renting and selling. Are penthouses really becoming so numerous, or is the term itself being misused?
A Penthouse By Any Other Name
Just five years ago, a survey by StreetEasy found that there were 174 units in Manhattan elevator buildings with PH in their number. By 2011, the number of PH addresses increased by 47 percent to 256. And in 2013 alone, 112 apartments labeled with PH have been listed.
Taken alone, these numbers don’t exactly suggest that penthouses are multiplying like bunnies, threatening to take over the city’s housing market. They don’t take into account, however, the many walk-up properties that label their upper floor units with a PH, as well as many luxury apartments that, for all intents and purposes, really are penthouses but just aren’t labeled as such.
For instance, the Dakota and the Osborne both contain “penthouses” that don’t even have the same amenities as the rest of the building. But because these former maid’s quarters are on the top floors, they carry that desirable PH label, even if they also sport low ceilings and small rooms.
Then there’s the simple practice of calling any luxury apartment, regardless of which floor it’s actually on, a penthouse. And as ultra-luxury construction continues to expand across Manhattan -- with the number of buildings with apartments selling for more than $15 million almost doubling over the past three years – more and more properties are being listed as “penthouses.”
And why shouldn’t brokers jump on the PH bandwagon? After all, calling an apartment a penthouse tends to attract those buyers and renters who are predisposed to NOT consider anything less than a property with a PH attached.
Renting and Buying a Penthouse
And speaking of renting and buying, there’s a big difference when it comes to apartments that carry the PH and apartments that just happen to be on the top floor.
When it comes to renting, of the current 306 top floor rentals available, 178 -- or 58 percent -- are labeled PH.
Rental Price of an Apartment Labeled “Penthouse” vs. Non-PH Apartment on Top Floor of Building:
Price Range- $0-$10,000/month
Rental Price of an apartment labeled “Penthouse” vs. Top floor of Building:
Price Range: $10,000-$50,000/month
As you can see, the “penthouse premium” is most apparent in apartments with lower rents. Specifically, in apartments with a monthly rent of $10,000 or less, the label “PH” adds an average of $1,355, or nearly 30%, to what would otherwise be $4,537 rent. In apartments with a monthly rent greater than $10,000, the label “PH” still commands a premium, although at 5.5% it is less pronounced.
So, if you’re looking to rent a top-floor apartment, ask yourself: “Am I paying a premium for the ‘PH’ label?” You may find that a top-floor apartment not labeled “PH” provides a better value for what is essentially the same product.