A fast-growing but often overlooked segment of commercial real estate is now drawing intense interest from developers, REITs, and major investors: the child-care property market. With parents increasingly returning to in-person jobs and seeking early education programs, demand for childcare services has surged — and the nation simply doesn’t have enough facilities to keep up.
A new report from CRE brokerage B+E reveals that this supply gap has turned childcare centers into one of the most attractive investment targets in commercial real estate. CNBC highlighted the findings, noting that developers and investors are stepping in to meet a need that continues to grow.
“This is the stuff that banks love to lend on,” B+E CEO Camille Renshaw said. “The amount of new child-care inventory hitting the market reflects developers finally securing strong tenants something extremely appealing to investors.”
A Market Growing at Lightning Speed
The U.S. child-care industry is already valued at $65.2 billion, with projections showing it could reach $109.9 billion by 2033, according to B+E’s analysis and data from Grand View Research. Several trends are fueling this increase:
- More parents returning to office-based work
- Expanded educational technology offerings
- Rising government support, especially for single and working mothers
- Growing awareness of early childhood development needs
This combination of social and economic forces has created a wave of demand one that current childcare providers cannot meet.
Most Child-Care Centers Lease Their Buildings
Available child-care properties for sale have grown 14% since the end of 2024, reaching 158 nationwide, according to B+E. While some operators own their facilities, many especially large national chains such as KinderCare and The Learning Experience prefer net lease structures.
Under a net lease, tenants handle the major property expenses including:
- Taxes
- Insurance
- Maintenance
This makes child-care facilities appealing to investors seeking stable, passive income with long lease terms and reliable tenants. Properties with more than 10 years remaining on their leases increased 12% this year, giving investors greater long-term certainty.
Developers Targeting ‘Child-Care Deserts’
The pandemic reshaped migration patterns, with many families moving to rural or suburban areas locations that typically have fewer childcare options. These regions are now known as child-care deserts, and developers see them as major growth opportunities.
To meet this demand, developer Fortec announced a partnership with financial advisory firm Equiturn to launch a $100 million early education real estate fund.
“The first thing we want to do with this fund is to institutionalize this sector,” said Fortec Chairman Pablo Barreiro. “Many real estate investors have never considered child-care properties, but the tenants are strong and the returns are promising.”
A Severe National Shortage: Millions of Children Without Care
The U.S. Census Bureau estimates that 14.7 million children under age 6 need daily care, yet only 8.7 million are enrolled in formal programs. This leaves a shortage of 6 million childcare slots nationwide.
Additional data shows:
- Average childcare waitlists are six months long
- 13% of families wait a year or more
- 51% of U.S. areas qualify as child-care deserts, meaning demand triples available capacity
Even modest expansion in the number of childcare centers would significantly increase demand for suitable properties, despite a slight decline in the under-6 population projected through 2030.
REITs Are Interested, but the Sector Remains Fragmented
Although some REITs own early education properties, childcare facilities account for only a tiny share of their portfolios. Historically, the sector has been highly local and fragmented similar to the early years of the single-family rental industry.
This fragmentation is exactly what excites developers and investors now: they see a chance to turn childcare real estate into a recognized asset class with national scale.
Fortec has already completed more than $230 million in childcare transactions across 13 states in the past five years. The new fund aims to expand that footprint significantly.
A Growing Opportunity for Investors and Communities
With strong tenants, rising demand, government support, and an enormous supply gap, childcare real estate is becoming one of the most compelling corners of the commercial property market.
For investors, the opportunity is clear: reliable tenants, long lease terms, and untapped markets.
For communities, expanding access to childcare is essential for economic stability, workforce participation, and family well-being.
As the sector becomes more organized and institutionalized, child-care properties may soon move from niche investments to a mainstream real estate category. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
