Childcare and Preschool Facilities Attract Growing Capital

Investors are giving early education properties a closer look as childcare centers, preschools, and other learning facilities show remarkably strong fundamentals. Demand for early childhood education continues to climb as more families return to work, dual-income households become more common, and younger demographics reshape both suburban and urban markets. That steady demand is turning these buildings into something investors increasingly view as reliable, income producing assets.

Part of the appeal comes from the structure of the leases and the reliability of the operators. Many early education providers sign long-term agreements with built in rent escalations, and a surprising number of them have strong credit profiles. The sector also benefits from a degree of recession resistance, since early education is tied more to societal necessity than discretionary spending. Institutional players and private equity groups have been making larger commitments in recent years, and transaction activity in this niche has begun to outpace several more traditional commercial property categories...

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RSK: The new hot niche in CRE. Lots of capital flowing into it and many good credit tenants with long term leases.