Leave It
You can leave the extra space at the top of the closet open to allow the storage of tall or oddly shaped items. This approach is most appropriate in a utility or sports equipment closet, where you store items such as dusters, extension poles and skis. If the closet in question is in the interior of the house, inside a bedroom or near a restroom, consider storing these tall seldom-used items in the back of the closet, behind linen or clothes. Do not let the location of the closet alone determine its purpose.
Second Closet Rod
Make use of the wasted space in the top of the closet by installing a second closet rod. A second rod for hanging storage doubles the width of the closet and not only makes use of the open space at the top of the unit, but also at the bottom. To install a second rod, move the original closet rod down 1 to 2 feet and then install a rod of equal length above the first.
Higher Rod
Raise the height of the existing closet rod to utilize the upper portion of a bedroom closet. A higher rod increases the accessible space in the lower portion of the closet so you can install drawers or shelves. Also, the increased rod height better accommodates the length of dresses, suits and other formal wear, allowing them to hang without wrinkling or touching the bottom of the closet.
Shelving
Add two or three shelves in the open space. Keep in mind that some people will have difficulty accessing these shelves. Reserve the space for seasonal clothing, such as jackets and sweaters, which otherwise occupies space in the main part of the closet. Consider storing a small step ladder or stool in the bottom of the closet so you can reach the upper shelves when necessary.