What Are the Pros and Cons of Buying a Penthouse in NYC?

Pros of buying a NYC penthouse include superior views and light, substantial outdoor space, tall ceilings, premium finishes, privacy, fewer neighbors, prestige and less noise.

Cons of buying a penthouse include higher pricing, potential loss of views from future construction, higher carrying costs, risk of large assessments, roof leaks, long elevator rides, greater liability, costlier renovations, climate considerations and greater difficulty when it comes to selling.

Click on the sections below to learn more about the key pros and cons of buying a penthouse apartment in NYC.

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Pros:
Superior exposure, views and light
Substantial outdoor space
Tall ceilings
Premium quality finishes
Privacy and prestige
Quieter

Cons:
You might overpay for your penthouse
Views could be blocked by future construction
Higher carrying costs
Risk of large assessments
Risk of leaks
Greater liability
Lack of original, pre-war detail
Penthouses are harder to sell
Long elevator rides
Costlier renovations
Practical issues
Climate considerations

A penthouse typically offers superior exposure, views and light compared to all other apartments in the building.

Being on the highest floor maximizes the odds of clearing the sight lines of adjacent structures.

That being said, a penthouse might not offer a compelling advantage in terms of views relative to other units on higher floors.

If the neighboring building to the south is 25 stories, a unit on the 27th floor may have a substantially similar view to a penthouse located on the 30th floor.

If you’re a buyer who cares mostly about views as opposed to the other advantages of a penthouse (i.e. outdoor space, exclusivity, privacy, etc.), you might be better off buying a higher floor unit since it won’t command the full penthouse pricing premium.

Penthouses in NYC typically offer expansive outdoor space which can be in the form of a private roof deck, terrace, balcony or some combination thereof.

It’s not uncommon for penthouses to offer multiple outdoor spaces. For example, a penthouse might have one large private roof deck off the main living area in addition to a smaller terrace adjacent to the master suite.

In addition to electrical and water connections, the private terrace of a NYC penthouse may even have a hook-up for a gas grill. Some NYC penthouses may even have a hot tub on the terrace.

NYC penthouses often have much taller ceilings than other units in the building. Tall ceilings are especially common for penthouse extensions which were added on top of existing buildings.

High end penthouses may also feature striking architectural features such as a glass atrium.

Penthouses usually feature premium quality finishes, such as Miele or Viking appliance packages, high-quality stone and tile in kitchen and baths as well as high-end hardwood floors and cabinetry.

While high end finishes add substantial cost, this investment adds longevity and allows a property age more gracefully.

Penthouse apartments in NYC offer additional privacy in the form of fewer neighbors as well as prestige and exclusivity. Since you’re almost always on the top floor, there’s no risk of hearing your upstairs neighbors.

Moreover, penthouse apartments typically have no same-floor neighbors (or perhaps just one or two) since the apartment takes up most if not all of the floor.

Owning a penthouse is also equally if not more prestigious than living in a NYC townhouse. In fact, many high net worth individuals strongly prefer penthouses over townhouses due to the former’s light, exposure and outdoor space with views.

Penthouses are usually quieter than other apartments because of the sheer vertical distance from the street as well as the fact that there usually aren’t any same-floor neighbors or units upstairs.

NYC penthouses command a premium of up to 10% or more compared to traditional apartments, but there’s still a risk of overpaying. Many penthouses are deliberately listed with an overinflated price initially to see if anyone will bite.

You might have noticed that many penthouse listings either omit square footage or utilize an inflated figure.

These techniques are designed to mask the pricing premium associated with the penthouse vs. other units in the building.

Having a seasoned buyer’s agent is essential if you’re buying a high value penthouse property in NYC. A good buyer’s agent can help you analyze comps and negotiate effectively while also helping you compare the key risks and advantages between penthouse listings in different buildings.

A key risk of buying a NYC penthouse apartment is that your views and light could be blocked by future construction. While all NYC apartments face this risk, it’s more severe for a penthouse because you may have paid a large premium specifically for unobstructed views.

For example, you may have paid extra for the penthouse on the 12th floor vs. the 10th floor specifically because the building across the street tops out at 10 floors.

This means your view is unobstructed and therefore significantly better. But what happens if a two floor extension is added to the building across the street?

The first way to mitigate the risk of future construction blocking your view is to check whether the penthouse you’re considering has lot line windows. Since these windows can be lost at any time should your neighbor decide to develop upwards, make sure that the apartment’s most desirable views are not from lot line windows.

Another way to mitigate the risk of future construction blocking your views is to order a Sightline report. This report analyzes FAR calculations and other factors affecting air rights in order to assess the risk of future development in adjacent lots. Some sightline reports may even provide 3D renderings to visually illustrate what might happen to views from your unit under a maximum development scenario.

A Sightline report can be ordered from 3rd party vendors such as TitleVest, a title insurance company.

It should come as no surprise that penthouses have higher carrying costs, but some buildings are particularly punitive in how they apportion common charges (in the case of a condo) or monthly maintenance (in the case of a co-op) to penthouses.

How much you pay in common charges or maintenance is determined by the relative ownership percentage of the building assigned to your apartment.

For condos, this is reflected in your unit’s “percentage of common interest (or common elements)”. In the case of a co-op, it depends on the number of shares assigned to your unit relative to the total share count for the building. These metrics are disclosed in a building’s Offering Plan.

Simply put, buildings have different methodologies for how ownership percentages are allocated. A penthouse in one building may have a much greater relative ownership % compared to a penthouse in a nearby building. This means that the former will have much higher common charges (or maintenance) in perpetuity.

Before you pull the trigger on a NYC penthouse, make sure that the carrying costs are broadly in-line with comparable apartments on the market. In addition to saving you money over the course of ownership, this will ensure that you don’t have difficulty when it comes to selling. Most prospective purchasers are strongly averse to buying apartments with uncharacteristically high monthly maintenance or common charges.

Penthouse units also have higher homeowners insurance premiums, although this is a rather small consideration given the significantly larger dollar amounts associated with common charges and property taxes.

Penthouse apartments are often subject to large assessments due to their high relative ownership percentage of the building.

For example, let’s say a penthouse in a small Manhattan condo building is assigned 38% of the common elements of the building.

The building has no reserve fund and the roof and parapet repair is projected to cost $150,000.

The penthouse is therefore responsible for 38% of the $150,000 assessment in order to pay for roof repairs. That comes out to $57,000.

While a penthouse should have a higher relative ownership % in any building, just make sure it’s somewhat reasonable compared to allocations for other units in the building.

For example, if a building’s ‘penthouse’ (which has no outdoor space) is on the 12th floor but there’s an identical apartment on the 11th floor, it wouldn’t make sense for the 12th floor apartment to have a percentage of common elements of 25% vs. 15% for the unit one floor below.

One of the biggest risks of buying a penthouse in NYC is the threat of periodic leaks as well as the inconvenience associated with roof and facade repairs.

Being on the top floor, you can expect there to be the occasional roof leak which results in minor damage to your apartment.

While the building is typically responsible for repairing any roof leak and associated damage inside your apartment, you’ll still have to deal with the inconvenience of bringing workers into your apartment to make drywall repairs, sand, repaint and so on.

Your building will also need to replace the entire roofing membrane from time to time. This is particularly inconvenient for the top floor apartment, as it means you’ll have workers traversing your roof for a week or more. Moreover, if your unit has a private roof deck, any decking or landscaping on your private roof deck may need to be removed and reinstalled for this repair.

Being on the floor, you also face a remote risk of a catastrophic issue such as a failure of the building’s parapet. This is the upper part of the facade which intersects with the roofing membrane. In some instances, water penetration might be occurring via the parapet as opposed to the roof itself.

If the source of the leak cannot be detected and repaired, the building may need to dismantle and rebuild the parapet. Practically speaking, this means that half of the top floor apartment (possibly your penthouse) needs to be sliced off and rebuilt.

Owning a penthouse can increase your risk of legal disputes with the building, particularly as it relates to liability for roof repairs as well as general use and upkeep of private outdoor space.

While the building is typically responsible for maintaining the roof beneath your private roof deck, the board may still try to stick you with the cost of any roof repairs if they allege that the damage was caused by your furniture or by the actions of you or a guest.

You may also find yourself in a legal dispute with the condo or co-op board over how you use private outdoor space.

Expect to be on the receiving end of fines and/or litigation if you install overweight furniture (such as a hot tub) without approval, make unauthorized alterations or disturb other unit owners by making too much noise on your roof deck.

Private roof space can also create conflict with a building if the space in question is not well defined in the building’s governing documentation.

One downside of a penthouse built via a vertical extension to a pre-war building is that it will lack original pre-war detail such as exposed brick, archways and intricate millwork.

However, developers of penthouse extensions often fill this void with other highly desirable features such as tall ceilings, large windows, skylights, atriums and decorative ceiling beams.

Penthouses typically take longer to sell due to the higher price point and inherently smaller pool of buyers.

While this isn’t necessarily the most important factor for high net worth buyers, it’s worth keeping in mind as you consider which penthouse to purchase.

An often overlooked downside of living in a penthouse is that it takes longer to get in and out of your apartment. Unless you have a private elevator, get used to long elevator rides in both directions with numerous stops.

Before pulling the trigger on a NYC penthouse, make sure you assess whether the building has enough elevators and there isn’t ordinarily a wait in the lobby.

Some buildings simply don’t have enough elevators, and this can lead to lines in the lobby during rush hour.

It’s also important to consider the fact that elevators are often out of service for repairs, routine maintenance or large overhauls. If a building only has two elevators and one needs to be totally replaced over the course of 4 months, you may find yourself taking five or even ten minutes to get in or out of your apartment.

One practical disadvantage of owning a penthouse apartment in NYC is that contractors may try to inflate their pricing simply because they think you can afford to pay more.

The only solution for this is to diligently procure multiple quotes, but doing so can drain your time and energy and distract from more important pursuits.

There are several practical considerations to be mindful of when buying a penthouse in NYC. For example, what if the power goes out and all elevators happen to be out of service? Are you prepared to walk down a dozen or more flights of stairs in the case of an emergency?

Will you be able to handle weeks of loud noises and commotion above your head when your building decides to replace the roof or rebuild the elevator bulkhead?

Are you comfortable with random maintenance workers appearing on your private roof deck in order to access building mechanicals or HVAC compressors for other apartments?

Penthouse apartments are often subject to more extreme temperature fluctuations compared to other units in the building. This has implications for utility bills. Prior to purchasing a townhouse, we recommend asking to see recent gas and electricity bills.