A penthouse is a spacious and well-appointed apartment, traditionally located on the top floor of an apartment building, [condominium](https://www.masterclass.com/articles/what-is-a-condo), or hotel. Today, realtors use the term to refer to any unit with a significantly more spacious and deluxe [floor plan](https://www.masterclass.com/articles/floor-plan-guide-how-to-draw-your-own-floor-plan) than the other units—qualities that make them the most expensive. \n\nThese luxury living spaces became popular in Manhattan during the 1920s, when the flush economy fueled a skyscraper building boom. New York City legalized these exclusive top-floor units in 1925—and businessman Condé Montrose Nast and heiress Marjorie Merriweather Post became two of the first owners of these top-floor units. Before they were rebranded as luxury dwellings, a penthouse referred to smaller servants’ quarters that could be hidden from sight on the roof of a building.\n\nThere are a few common characteristics that define contemporary penthouses:\n\n1. __High ceilings__: A defining feature of a penthouse unit is its [high ceilings](https://www.masterclass.com/articles/types-of-ceilings-explained) and large ceiling windows that allow light to flood in and create the illusion of more space.\n2. __Outdoor access__: Historically, luxury penthouses are setback from the outer walls and the rest of the building, creating penthouse access to an outdoor terrace where residents can entertain guests, [meditate](https://www.masterclass.com/articles/how-to-meditate), or enjoy a meal.\n3. __Premium finishes__: Since penthouses are luxury units, they are usually fitted with premium appliances, hardware, and other finishes that elevate the space.\n4. __Premium views__: The single-most defining feature of a penthouse is its access to the best views. Although the luxury apartments are usually located on the top floor, for this reason, a penthouse may be located on a lower floor where it might have access to better, unobstructed views.\n5. __Square-footage__: In addition to good views, penthouses are sought after for their roomy floor plans, though some penthouses in New York can run as small as 500 [square feet](https://www.masterclass.com/articles/how-to-measure-square-footage-of-a-house). \nLiving in a top-floor penthouse has many perks, including: \n\n1. __Memorable views__: Real estate agents often emphasize that penthouse dwellings have some of the best views in the city, which residents can appreciate throughout the living space with its floor-to-ceiling windows. \n2. __Outdoor space__: In urban areas where outdoor space is premium, having access to an exclusive terrace can be priceless for residents in densely populated cities.\n3. __Privacy__: Penthouses offer their residents greater privacy as their large size means fewer units on the floor and usually no one living above them. These premium dwellings are frequently directly accessible by a private entrance. \nThese luxury living spaces aren't without a few drawbacks, however, such as: \n\n1. __Higher price__: While living in a top-floor apartment comes with many perks, these top-of-the-line features come with a high price tag. \n2. __Long elevator rides__: Nice views come at the cost of longer-than-usual elevator rides or countless flights of stairs to climb, which can be inconvenient if you’re in a rush or need to make multiple trips to your car.\n3. __Outdoor space__: While a terrace provides residents with a place to relax or entertain, it does mean that residents have to pay additional costs for maintaining the landscaping. \n\nPenthouses’ premium size, views, and exclusivity distinguish them from apartments. There are usually only a few penthouse units, at most, in an apartment building that might have a large number of apartments of varying sizes—from a studio to a multi-bedroom dwelling. Penthouses are distinguished by their nice views, ample square footage, high ceilings, and premium amenities.\n\nAll you need is a [MasterClass Annual Membership](https://www.masterclass.com) and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market. \nA penthouse is a type of luxury real urban estate notable for its grand views, quality amenities, and air of exclusivity.