UPPER BERTHS;PENTHOUSE DEMAND FUELS OVER-THE-TOP BUILDING EFFORTS

Every Manhattan neighborhood is cobwebbed these days with scaffolding; cranes are hoisting lanky steel girders up the sides of apartment towers as developers create yet another penthouse, as it were, out of thin air.

New penthouses have become de rigueur, the jewels in the crown--the development tidbits that fetch the highest price per square foot, either for sale or for rent. Hardly a new apartment house is built without one marble-encrusted penthouse, or a handful of them.

"The demand for penthouses is unquenchable," said Deanna Kory, a senior vice president of Halstead Property Co.

But developers aren't the only people in town building on spec. What is unusual about the low-slung three-bedroom penthouse proposed for the roof of an antique nine-story apartment house at 119 W. 71st St. is that it will be built and paid for by the building's owners: the co-op itself.

The stucco and glass penthouse, designed to echo but not replicate the brick and limestone details of the 86-year-old structure, will then be sold--and the profits deposited in the co-op's reserve fund.

The idea of co-op boards' commissioning penthouses is not brand new: it was floated in the late 1980s, during the last real estate boom. But this appears to be the first time a building is going forward.

The West 71st Street penthouse design has been approved by the city's Landmarks Preservation Commission and has received tentative approval from the Buildings Department; contractors' bids are due and construction could start in the spring and be finished four to six months later.

"It's a fabulous idea," said Stuart M. Saft, the real estate lawyer who is chairman of the Council of New York Cooperatives. "I've spoken with a number of co-ops in the past, but as far as I know, this is the first co-op that's actually doing it."

Besides the chance for a hefty profit, the board would generate income from maintenance fees for the penthouse, which are estimated at $1,500 to $2,000 a month.

Robert Warshaw, president of the board at 119 W. 71st St., said the idea began with discussions about what to do with a vinyl-sided shack on the roof next to the building's water tower.

"In the late '80s, just before the building went co-op, the owner had started to convert an old laundry room into a penthouse," said Warshaw, a partner at the investment banking firm of Lazard Freres. "We had to make a decision: whether to knock it down--it's a violation to have an unfinished construction project--or to finish it somehow."

The board did a financial analysis and sought ideas from the residents, some of whom wanted the shack torn down and the roof turned into a recreation area.

Ultimately, the board decided to ask Manhattan architectural firm Adams Soffes Wood to draw up plans for a penthouse. The board specified that it would have to fit comfortably atop the 1912 building, designed by Rouse & Goldstone with a four-foot cornice underlaid by Pompeian-red diamonds.

The architects were asked to use every inch of the relatively small space allowed by zoning and to maximize the price the penthouse would fetch.

"There were many design problems," said Lawrence Adams, the architect in charge. "It is a very complex project, not only structurally, but fitting into the zoning regulations and getting approval from the Landmarks Commission. It was a complicated Buildings Department process."

The architects chose what they considered the easiest route: reinstating the 1986 permit to convert the laundry room and "piggyback onto that approval," Adams said.

In New York City, additions to the height of a building are strictly regulated by the "floor-area ratio," or the amount of floor space in the building compared with the size of the lot where it stands. For 119 W. 71st St., there was not a lot of floor-area ratio left.

"This penthouse pretty much uses it all up," Warshaw said.

Within a relatively small space--less than 1,500 square feet--the architects have managed to create a three-bedroom aerie.

"We had initially toyed with making two large bedrooms," said Jim Wood, another partner at the firm. "But the real estate agents said they could get more money for three smaller bedrooms."

Whenever possible, the designers popped out windows on the sides of the penthouse (which didn't affect the floor-area ratio): in the dining room and in two bedrooms, the smaller of which is 10-by-11 feet.

On the street side, they designed an octagonal living room with a fireplace and 12-foot ceilings, topped by clerestory windows. Then they capped the top of the living room with a flat cornice in the same red as the diamonds under the distinctive cornice.

The architects also added a 20-by-40-foot wood deck outside the living room and dining room, and a smaller terrace outside the 12-by-13-foot master bedroom. (Decks do not count against the floor-area ratio, either.)

Warshaw and the two architects said they could not estimate the cost of building the penthouse, which will be financed out of the reserve fund or, if need be, from the building's credit line. The application to the Landmarks Commission last summer projected the cost at $250,000, a figure that all parties now say was somewhat low.

"Contractors are getting back to us with their bids . . . and we'll see what they come in with," Warshaw said. The cost to the building is hard to assess, he said, because the board also voted to put in a $130,000 elevator, which would allow direct access to the penthouse. A new roof is also being installed.

The board was particularly anxious not to disturb the existing tenants with construction noise. Besides having noise insulation added under the new floorboards, the co-op will have the old freight elevator renovated so that workers and materials can go directly to the roof.

The board president says there is no way to calculate the profit yet--especially because he does not know how much the penthouse will bring. But several real estate agents offered guesses. Although they saw some negatives--the penthouse's relatively small size and the building's lack of a doorman--they saw some pluses, too.

"If it is as spectacular as it appears, it could go for around $850,000, and possibly more," Kory, the Halstead broker, said after she saw the floor plan and one computer rendering. "They appear to have maximized the light, and just the fact that it is brand new is very appealing."

She compared the new penthouse with another one on the same street, at 17 W. 71st St., in what she called a similar building. Although that penthouse is much bigger--1,840 square feet, with terraces about the same size--its condition could have been described only as "good" when it was sold last year. ("Good" shape, Kory said, means that "you could live in it, but you'd probably want to redo it.") That penthouse sold in May, when prices were lower, for the asking price, $1.2 million.

Jeffrey Sholeen, an agent for the Corcoran Group, said he spent a recent weekend showing penthouses.

"Most of them averaged around 1,200 square feet and were priced from $650,000 to $950,000," he said. He would discount the value of the new penthouse because it is a co-op--condominiums fetch more, being easier to buy and sublet--and is in a building without a doorman.

"But if it was really special," he said, "it might bring $795,000 or even $850,000."

In September, Saft, the co-op association chairman, wrote a five-page memorandum called "Developing the Roof: New Revenue for Old Co-Ops and Condos," which was sent to 200 of his law firm's co-op board clients.

In it, he laid out all the things a board must check before developing a roof, starting with the most important: finding out whether the original sponsor had already sold the right to develop the roof, or sold the air rights above it. Saft's paper then analyzed different courses of action, including offering the roof space to the top-floor tenants, who might want to convert their simplex to a duplex.