How Big a Premium for Higher Floors?

If Eskimos supposedly have 38 words for snow, leave it to New Yorkers to coin the most and best words for anything relating to skyscrapers, views, and the like.

Words like “view-break,” defined as:

“The price-point at which views in a building clear the treetops or crest above the brick-and-mortar horizon of neighboring buildings.”

“”The Stratospherians”; The NYT.

“View-break” explains why there are actually two scales for determining the premium associated with increasing height in a building:

One. An incremental scale for each successively higher floor in a building. Such an increment is typically considered to be 1% to 2% per floor.

Two. Above or below the “view-break.” (In theory, I suppose it’s possible for a skyscraper in a thicket of other skyscrapers to have multiple “view-breaks.”)

As opposed to the first premium, the premium associated with being above the view-break is very much not incremental.

Price Bump . . . or Jump?

What kind of numbers are we talking?

Assume two units in “Building A,” both south-facing and identical in all ways except that one is on the 25th floor and the other on the 26th.

Now assume that immediately to the south is “Building B,” which just so happens to be . . . 25 stories.

Because the higher unit is above the view-break, it could command as much as a 30%(!) premium!

Scenario #2: Below the View-Break

Which raises the question: in the same building, how much more would you be willing to pay for a 20th floor unit vs. . . . say, an 8th floor one?

A lot, because the higher unit will have more natural light and less shadow ” not to mention less noise, another “big city” consideration.

P.S.: This all sort of recalls a “motivational” speech I heard when I was prepping for the bar exam, more than 20 years ago.

The instructor’s “carrot” to get us to study hard and pass (I did) was this quote (observation?): “Life is like being a sled dog. Unless you’re the lead (top) dog, the view never changes.”

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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