Early education real estate is luring big money for small kids’ care

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and emerging opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. become a member to receive future editions straight to your inbox.

Parents’ growing demand for early education is driving a boom in a small but fast-growing subsector of commercial real estate. The industry is so undersupplied that it is becoming increasingly attractive to developers and investors alike.

The U.S. child care market is currently worth $65.2 billion and is expected to reach $109.9 billion by 2033, according to a report from CRE brokerage B+E based on data from Grand View Research. This increase is driven by trends in parents returning to the office, advances in education technologies, and increased government funding, especially for single and working mothers.

And real estate is a big part of the story.

According to net lease specialist B+E, the number of early education properties offered for sale since the end of 2024 has increased by 14%, reaching a total of 158. Although some operators have their own facilities, a significant number of centers, especially large national chains, KinderCare and Learning Experience use net lease structures where tenants are responsible for property expenses such as taxes, insurance and maintenance

According to B+E, the number of existing properties with more than 10 years left on their lease has increased by 12% in 2025.

“This is the stuff banks like to lend on,” B+E CEO Camille Renshaw said. “What that tells you is that the vast majority of things that come to market are about developers eventually getting a new tenant. This is coming to market for investors, and it’s very exciting.”

During the pandemic, many families moved to more rural areas where child care facilities were fewer. Developers are looking for ways to exploit these so-called child care deserts.

Fortec, a national developer specializing in early childhood education projects, recently announced a partnership with Equiturn, a global financial advisory firm, 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 Pablo Barreiro, Fortec’s president. “Many people who invest in the triple network [a type of net lease]”In a lot of real estate, they’ve never heard of this industry, and it’s a great industry because you have good tenants with really good credit.”

There is also a fundamental supply gap. According to data from the U.S. Census Bureau, of the 14.7 million U.S. children under age 6 who need day care, only 8.7 million are currently enrolled in formal programs, leaving a gap of 6 million children. Waiting lists for a child to be enrolled last an average of six months, with 13% of families waiting a year or more, data shows. Even partial catch-up would materially increase center demand despite a modest population decline in the under-6 population projected by 2030.

“Fifty-one percent of counties in America are called child care deserts. Child care desert basically means: [there] The demand for every available supply seat is three times greater,” Barreiro said.

Until now, early education real estate has been a largely fragmented, local business, similar to single-family rental housing. There are REITs with some early education properties, but child care generally makes up a very small portion of their total assets. The category has not yet been defined and scaled as its own asset class.

This is very similar to the situation of high-end housing or healthcare offices before they were recognized as the corporate real estate sector, according to Fortec, which aims to legitimize the subsector with its new fund.

Fortec has processed more than $230 million in transactions across 13 states over the past five years, and this funding expands that footprint. Equiturn is a leader in fundraising and investor outreach.

Investors’ interest in early childhood has previously been most evident among single- and multi-family offices, indicating its economic resilience. A recent note from Aceana Group, a Florida-based single-family office, highlighted the industry’s persistent demand and strong unit economics, as well as the growing recognition of child care as essential infrastructure rather than an optional service.

“Larger centers often generate millions of dollars in annual revenue with double-digit profit margins once occupancy stabilizes,” Aceana said in a note. “Most operators lease their facilities on long-term, triple-net deals with built-in annual increments, shifting costs to the tenant and providing landlords with a bond-like income stream.”

This provides a hedge against inflation, making them particularly attractive in today’s environment. Institutional investors are starting to take notice.

“A lot of large institutions are investing in the operations side of early education,” Barreiro said. “I’m starting to see some of the larger institutions now starting to look at this, but in order for them to invest, we need to create a product that suits the numbers they’re looking at and also the risk they’re looking at.”