The View From the Top

By SANETTE TANAKA for the Wall Street Journal

As penthouses multiply—and command ever higher prices—they've become their own segment of the luxury market. A look inside homes around the globe that feel like they're on top of the world.

It's getting more crowded at the top.

Owning a piece of a skyscraper's top floor—where your closest neighbors have feathers—is the pinnacle of real estate. Penthouses make up less than 1% of real-estate listings, but their average price a square foot is 84% higher than that of similar, nonpenthouse units, according to an analysis by real-estate website Zillow.

The word itself will cost you. Simply having the designation of "penthouse" in the listing can result in a sale premium of 5% to 10%, says Jonathan Miller, a New York City-based appraiser and president of Miller Samuel Inc.

Now, the word "penthouse" is being applied to all sorts of condos—even those on lower floors—and it's not uncommon to see multiple penthouses stacked on top of one another. Echo Aventura, a new development in Miami by Property Markets Group and JDS Development, will sport 18 penthouse units when it is completed in 2015, and Trump Place at 120 Riverside Blvd. in Manhattan has 44 penthouses.Mark Zilbert, president and CEO of Miami-based Zilbert International Realty, draws a distinction between penthouse-level and penthouse-style. "Penthouse really just means ultraluxury. I know people in high buildings who say, 'Come visit my penthouse,' and it's not a penthouse," he says.

He adds that lesser penthouses are sometimes differentiated as "lower penthouses" and top units are dubbed "super-penthouses" or "tower suites."The penthouse first emerged around the turn of the 20th century and referred to a simple rooftop structure that housed equipment and allowed access to the roof, says Andrew Alpern, an architectural historian and author of "Luxury Apartment Houses of Manhattan: An Illustrated History.

" Wealthier individuals lived on lower floors, with the top level reserved for maids' quarters and laundry rooms.As elevators became more common, the wealthy began to gravitate toward higher floors to escape the noise and smog and to get better views, Mr. Alpern says.In time, an entire penthouse industry emerged. "By the last boom, of 2003 to 2007, it was game on. For many developers, the penthouse and the upper floors are the profit," Mr. Miller says.

Last year, two triplex penthouses in Miami Beach, Fla., sold for a record $34 million, according to news reports. In January, a penthouse in Manhattan's Walker Tower sold for $50.9 million.But as the number of penthouses on the market proliferates, their value could decline. Mr. Miller warns that the penthouse cachet works in part because they are so exclusive, and oversaturating a building with penthouses may dilute the premium.

As it stands, buyers' desire for penthouses seems to be holding strong."This is the crowd that wants the best and has the resources to buy what they want to buy," Mr. Zilbert says. "Of all the millionaires and billionaires in the world, it just takes one" buyer.

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