Fortec Adaptive Reuse Project in Barrington, Illinois.
Provided by: Fortec
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Growing parental demand for early education is creating a boom in a small but rapidly growing subsector of commercial real estate. This sector is in very short supply, making it increasingly attractive to both developers and investors.
The U.S. child care market is currently valued at $65.2 billion and is projected to grow to $109.9 billion by 2033, according to a report from CRE brokerage firm B+E, citing data from Grand View Research. This surge is driven by the trend of parents returning to the office, advances in educational technology, and increased government funding, especially for single and working mothers.
And real estate is a big part of this story.
According to online leasing specialist B+E, the number of early education properties available for sale has increased by 14% since the end of 2024, reaching a total of 158 properties. Although some operators own their own facilities, a significant number of centers, especially large national chains such as Kindercare and Learning Experience uses a net lease structure, with real estate costs such as taxes, insurance, and maintenance being paid by the tenant.
According to B+E, the number of available properties with 10 years or more left on their leases increased by 12% in 2025.
“This is something that banks love to lend,” said Camille Renshaw, CEO of B+E. “We’re seeing that the majority of what’s coming to market is what developers have ended up acquiring new tenants for. That’s coming to market for investors, which is very exciting.”
During the pandemic, many families moved to rural areas where childcare facilities are scarce. Developers are trying to take advantage of these so-called childcare deserts.
Fortec, a national developer specializing in early childhood education projects, just announced a partnership with Equiturn, a global financial advisory firm, to launch a $100 million early childhood education real estate fund.
“The first thing we want to do with this fund is to institutionalize this sector,” said Pablo Barreiro, chairman of Fortech. “A lot of people who invest in triple net[a type of net lease]and a lot of real estate haven’t even heard of this sector. It’s a really good sector because we have really good tenants with good credit.”
Additionally, there is a fundamental supply gap. Of the 14.7 million children under age 6 in the United States who need daily child care, only 8.7 million are currently enrolled in formal programs, leaving a gap of 6 million children, according to U.S. Census Bureau data. Data shows that waiting lists for children to enroll are on average six months long, with 13% of families waiting more than a year. Despite the expected gradual decline in the under-6 population by 2030, even partial catch-up will result in a significant increase in demand for centres.
“Fifty-one percent of America’s regions are what are called child care deserts. Child care deserts basically mean there is three times as much demand for every available seat,” Barreiro said.
Fortec Adaptive Reuse Project in Barrington, Illinois.
Provided by: Fortec
Until now, early education real estate, like single-family rental housing, has largely been a fragmented, local business. Although some REITs own some early education properties, child care facilities typically represent only a small portion of their total holdings. This category has not yet been defined as its own asset class and has not been scaled.
According to Fortec, this is very similar to the situation before senior housing and medical offices were recognized as institutional real estate sectors, and the new fund seeks to legitimize this subsector.
Fortec has completed more than $230 million in transactions in 13 states over the past five years, and this fund expands on that track record. Equiturn is leading the fundraising and investor support.
Investor interest in early childhood has so far been most pronounced in single-family and multifamily offices, demonstrating its economic resilience. A recent report from Aseana Group, a Florida-based single-family office, highlights the sector’s persistent demand, strong unit economics, and growing recognition of child care as essential infrastructure rather than a discretionary service.
“Large centers typically generate millions of dollars in annual revenue and can expect double-digit profit margins once occupancy levels stabilize,” Aseana’s note said. “Most operators lease their facilities on long-term triple-net contracts with built-in annual escalations, passing costs on to tenants and providing a bond-like income stream for landlords.”
This provides a hedge against inflation and is particularly attractive in today’s environment. Institutional investors are also starting to pay attention.
“Many major educational institutions are investing in the operational side of early education,” Barreiro said. “We’re starting to see some of these larger institutions start to look at this, but in order for them to invest, we need to create products that also address the numbers they’re looking at and the risks they’re looking at.”
