A Fortec adaptive reuse project in Barrington, Illinois.
Courtesy: Fortec
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Rising demand from parents for early education is causing a boom in a small but fast-growing subsector of commercial real estate. The sector is so undersupplied that it’s 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 B+E, citing data from Grand View Research. The surge is being driven by return-to-office trends for parents, advancements in educational technologies, and increased government funding — particularly for single and working mothers.
And real estate is a huge part of the story.
Since the end of 2024, the number of early education properties available for sale has grown by 14%, reaching a total of 158, according to B+E, which specializes in net leasing. While some operators own their facilities, a significant number of centers, especially large national chains like KinderCare and The Learning Experience use net lease structures, in which tenants are responsible for property expenses like taxes, insurance and maintenance
The number of available properties with more than 10 years remaining on their lease terms increased by 12% in 2025, according to B+E.
“This is the stuff that banks love to lend on,” said Camille Renshaw, CEO of B+E. “It shows you that the vast majority of stuff coming on the market is developers finally getting a new tenant. That is coming to the market for investors and is very exciting.”
During the pandemic, a lot of families moved to more rural areas, where there are fewer child-care facilities. Developers are looking to capitalize on these so-called child-care 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 education real estate fund.
“The first thing that we want to do with this fund is to institutionalize this sector,” said Pablo Barreiro, chairman of Fortec. “A lot of people that invest in triple net [a type of net lease], in a lot of real estate, they’ve never heard about this sector, and it’s a very good sector, because you have really good tenants with good credit.”
In addition, there is a fundamental supply gap. Of the 14.7 million U.S. children under 6 years of age who need daily care, only 8.7 million are currently enrolled in formal programs, leaving a 6 million child shortfall, according to data from the U.S. Census Bureau. Waitlists to enroll a child average six months, and 13% of families wait a year or more, according to the data. Even partial catch-up would materially lift center demand, despite a modest population decline in the under-6 cohort projected through 2030.
“Fifty-one percent of areas in America are what is called a child-care desert. A child-care desert means basically that [there] is three times the demand for every seat of supply that is available,” said Barreiro.
A Fortec adaptive reuse project in Barrington, Illinois.
Courtesy: Fortec
Until now, early education real estate has been largely a fragmented, local business, much like single-family rental housing. There are REITs that own some early education properties, but child care is usually a very small portion of their total holdings. The category has yet to be defined as its own asset class and scaled.
This is very similar to where senior housing or medical offices were before they became recognized as institutional real estate sectors, according to Fortec, which is looking to legitimize the subsector with its new fund.
Fortec has completed more than $230 million in transactions across 13 states over the past five years, and this fund expands that footprint. Equiturn is leading fundraising and investor outreach.
Investor interest in early childhood has previously been most significant among single- and multifamily offices, which point to its economic resilience. A recent note from Aceana Group, a Florida-based single-family office, highlighted the sector’s persistent demand and strong unit economics as well as the increasing recognition of child care as essential infrastructure rather than a discretionary service.
“Larger centres typically generate millions of dollars in annual revenue, with double-digit profit margins once occupancy stabilizes,” the Aceana note said. “Most operators lease their facilities on long-term, triple-net agreements with built-in annual escalations, which shift expenses to the tenant and provide landlords with bond-like income streams.”
This offers a hedge against inflation, making them particularly appealing in today’s environment. Institutional investors are starting to take notice.
“A lot of big institutions are investing on the operation side of early education,” said Barreiro. “I’m starting to see some of these big institutions starting to look at this now, but in order for them to invest we need to create a product that also goes with the numbers that they are looking at and also with the risk that they’re looking at.”
Source: https://www.cnbc.com/2025/12/03/early-education-real-estate-luring-big-money.html
