The City of Seattle Head Tax is intended to help solve the homeless problem. In previous articles we discussed the impact of governmental attempts to solve this issue, and the effects on commercial real estate. The charitable efforts of Vulcan (Paul Allen) and others have come up with a potential solution. They are building 96 square foot tiny houses. The first 36 of these donated units are going up on city land on Yesler Avenue.

Even with this donation, there is a cost. Each unit has no private bathrooms or kitchen areas. These services are provided in a common area. We now take and add in the cost of security, services, etc. and that is currently calculated at only $300,000 per year, or a cost of $8,333 per unit or $694 per month. Let us now calculate the cost of the non-income producing land and the actual (though donated) cost of building, moving, and setting up the homes on the site.

The multi-family residential industry in Seattle builds micro housing units at about $500 per square foot. These units range in size from 250 to 350 square feet and rent for $1,000 -1,200 per month. If you are in commercial real estate, and you do the math, our conclusion is quite simple; private development is the answer, not public. Head Tax as a solution? Use the money to work with the homeless to transition them to jobs, not provide shelter and let the commercial real estate industry create the solutions for shelter.