- A penthouse is traditionally known as the top-floor unit of a luxury residential building.
- But the definition of a penthouse is changing, Steve Gold, a luxury real estate broker and star of “Million Dollar Listing New York” told Business Insider.
- Now, “penthouse” is usually more of a marketing term that refers to a unit with a different layout from others in the building, ample outdoor space, and great views – but it’s not necessarily on the top floor.
- The evolving terminology can sometimes help real estate agents sell apartments for higher prices, but it can be confusing for buyers.
When most people think of a penthouse, it’s the top-floor unit of a luxurious residential building that typically comes to mind.
But in 2019, the definition of a penthouse has become murkier. In New York City in particular, prospective buyers must navigate terms such as “triplex penthouse” and “sky loft” and figure out why a unit called a “penthouse” might actually have four or five floors above it.
“Along with the development boom that we just had, the term penthouse has evolved a little bit from the traditional sense of the top-floor apartment – which is the penthouse – to more of a marketing term in general to help achieve sometimes higher sales figures and a distinction from other units in the building,” Steve Gold, a luxury real estate agent at Corcoran and star of Bravo’s “Million Dollar Listing New York,” told Business Insider.
In the past, a penthouse was exclusively defined as the top-floor unit, according to Gold.
“Now, industry-wide at least among brokers, a penthouse is defined as anywhere in the building where the building begins to ‘set back’ – in other words, when the building begins to have terraces,” Gold said. “So if you have a building that has the shape of a wedding cake, you have many ‘penthouse apartments’ there, which is great if you’re a developer and you have five penthouses versus only one to sell.”
According to Jason Haber, an agent at Warburg Realty in Manhattan, “the days of the penthouse being the top floor are long gone.”
These days, the term can be applied to a unit if it has a different layout, higher ceilings, or other amenities that differentiate it from other units in the building, he said.
The downside of this changing terminology is that it can bewilder potential buyers.
“I guess it makes it confusing for consumers … because what is a penthouse?” Gold said.
At 432 Park Avenue, New York City’s tallest residential building, floors 91 through 96 are all referred to as penthouses because they have different layouts than the rest of the building and some are full floors, Business Insider previously reported.
The top-floor unit at The NOMA at 50 W. 30th St., one of Gold’s listings at Corcoran, is called “Penthouse 2,” even though it’s the uppermost unit. The three-bedroom residence, which includes a 413-square-foot terrace, is asking $US6.3 million.
“It’s designated as Penthouse 2 in the offering plan so I’m marketing it as such, but it is the true penthouse because it’s the top one,” Gold said.
The unit below, Penthouse 1, although not the “true” penthouse, also has direct elevator access and ample outdoor space, but also more square footage overall and a different layout, according to Corcoran. It will soon be listed by Corcoran.
And at One West 67th Street on the Upper West Side, Gold is selling a “triplex penthouse.”
“It’s a combination of what was one of the original penthouses in the building combined with a massive duplex below,” he said.
The highest unit is not always the best unit
Some might feel a bit misled by a unit dubbed “penthouse” that’s not on the top floor, but sometimes the best unit in a building isn’t actually the highest unit, according to Gold.
“Contrary to popular belief, sometimes the top penthouse isn’t the best penthouse in the building,” Gold said. “There could be ones in the building with larger terraces or more unobstructed views, depending on the property. It’s really a case by case scenario.”
And in certain cases, Gold said, real estate agents might choose to ditch the penthouse moniker altogether.
“I have a listing at 234 E. 23rd Street where it is the first setback in the building and theoretically a penthouse, but we decided to market it as a ‘sky loft,’ you know, something to differentiate it,” Gold said.
They ended up renting it for close to $US50,000 per month and now it’s for sale for $US10.9 million.
The penthouse surplus in NYC
Regardless of what they’re called, in New York City, the traditional luxury penthouse apartment seems to be losing some of its former allure – largely because there are so many of them.
“Like any commodity, when the market is saturated with them, their value declines,” Jason Haber, an agent at Warburg Realty in Manhattan, told Business Insider in 2018. “If under every rock you found a diamond, diamonds would decline in value. That’s what is happening right now.”
Many of these penthouses sit on the market for months and are eventually sold at heavily discounted prices, which has prompted some real estate companies to split these massive penthouses into multiple smaller, cheaper units to get them off the market.
The New York Times reported last year that some developers are even opting to turn top-floor penthouse units into shared amenity spaces rather than sell them as singular pricey units, betting on the overall value the shared space would add to the building.
But Gold says penthouses are still as attractive as ever to buyers.
“At the end of the day, we still have a limited number of penthouses in a building and most of those are prime real estate in the upper floors with outdoor space,” he said. “… Really, for me, penthouse is synonymous with luxury, with outdoor space, and the top floor. But it’s not always the case and there’s always exceptions to the rule.”
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