The Real.Est List
What penthouse premium?
A little while back, we asked Manhattan appraiser Jonathan Miller to explain how much a higher floor is worth.
He told us that all other things being equal, appraisers tack on about 1% per floor, with bigger adjustments between the ground floor and first floor, the first floor and second floor, and the point at which the views clear the roofline of neighboring buildings. (You can read the full post here.) Open views are worth more, and in walk-up buildings, the whole business is flipped on its head, with lower floors generally worth more than higher floors--especially walk-ups above the 4th floor, which can be as hard to finance as they are to get to.
But we neglected to ask Miller (who, besides keeping close tabs on the NYC real estate market, is also the man behind The Matrix, a smart blog about real estate economics) about the premium for penthouses.
Specifically, if the penthouse apartment is exactly the same as the one below (in size, layout, outdoor space, amenities, etc), does it warrant a special bump beyond the standard 1%, just for being the penthouse?
"Generally not," Miller informed us when we went back for clarification. "From a personal standpoint, I could even say that such an apartment is worth less than the apartment below simply because it is more vulnerable to roof issues like leaks and heat."
Slapping a higher price on the penthouse "was tried during the housing boom in the 1980's and generated no known premium," says Miller.
He also reminded us that although the word penthouse conjures up a luxe set-up including outdoor space, fireplaces, fewer neighbors, and a unique layout, some penthouses are actually quite a bit less show-stopping than lower-floor relatives.
"The penthouse level of buildings such as The Dakota and The Osborne because are basically reclaimed servant quarters," says Miller.
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