A significant shortage of early education facilities across the United States is creating a new and rapidly growing opportunity for commercial real estate investors. Driven by parents returning to the office and increased government support, the demand for child care has far outpaced the available supply, turning this once-overlooked sector into a magnet for developers and institutional capital.
The U.S. child care market, currently valued at $65.2 billion, is projected to expand to nearly $110 billion by 2033. This growth is attracting serious financial attention, with new investment funds forming to capitalize on the national shortfall in early education services.
Key Takeaways
- The U.S. child care market is expected to grow from $65.2 billion to $109.9 billion by 2033.
- A supply gap leaves 6 million children under the age of six without access to formal care programs.
- More than half of the U.S. is considered a "child-care desert," where demand is at least three times greater than supply.
- A new $100 million real estate fund has been launched by Fortec and Equiturn to develop new early education centers.
- Investors are attracted to the sector's long-term, triple-net leases, which offer stable, inflation-hedged returns.
A Market Defined by Scarcity
The core issue fueling this real estate trend is a fundamental gap between supply and demand. According to data from the U.S. Census Bureau, of the 14.7 million American children under age six who require daily care, only 8.7 million are enrolled in formal programs. This leaves a staggering 6 million children without a spot.
This scarcity has created long waitlists for parents, with the average family waiting six months to secure a place for their child. For 13% of families, the wait extends to a year or more. The situation is so severe that it has given rise to the term "child-care desert."
"Fifty-one percent of areas in America are what is called a child-care desert," said Pablo Barreiro, chairman of Fortec, a national developer specializing in early education projects. "A child-care desert means basically that there is three times the demand for every seat of supply that is available."
This imbalance is particularly acute in suburban and rural areas, many of which saw population growth during the pandemic but lack the necessary infrastructure to support working families. Developers are now actively targeting these underserved communities.
The Investment Appeal of Early Education
For commercial real estate investors, the early education sector offers a compelling combination of high demand and financial stability. Many large child care operators, such as KinderCare and The Learning Experience, prefer to lease their facilities rather than own them. This creates opportunities for property investors who can secure long-term tenants.
Stable and Secure Leases
The number of available early education properties with more than 10 years remaining on their lease terms increased by 12% in 2025, signaling strong operator confidence and providing long-term security for property owners.
These arrangements are often structured as triple-net leases, where the tenant (the child care operator) is responsible for property taxes, insurance, and maintenance costs. This model shifts most of the property-related expenses away from the landlord, creating a predictable, bond-like income stream.
"This is the stuff that banks love to lend on," commented Camille Renshaw, CEO of CRE brokerage B+E. She noted that the increase in new properties with long-term tenants coming to market is a very exciting development for investors.
Financial Performance and Resilience
The unit economics of child care centers are also highly attractive. A recent analysis from Aceana Group, a single-family office, highlighted the sector's economic resilience. It noted that larger centers can generate millions of dollars in annual revenue and achieve double-digit profit margins once they reach stable occupancy.
Furthermore, these leases typically include built-in annual rent increases, providing landlords with a natural hedge against inflation. This financial structure makes early education real estate a particularly appealing asset class in the current economic environment.
New Capital Enters the Fray
Until recently, investment in child care real estate was fragmented and dominated by local developers and smaller family offices. However, the sector's potential is now drawing in larger, institutional players who are looking to scale their investments.
From Niche to Mainstream
The current state of early education real estate is often compared to where senior housing or medical office buildings were decades ago—niche sectors that eventually grew into recognized institutional asset classes. The goal of new funds is to accelerate that transition for child care facilities.
A significant move in this direction is the recent announcement of a $100 million early education real estate fund launched through a partnership between developer Fortec and financial advisory firm Equiturn. The fund's primary objective is to develop new facilities in underserved areas and help formalize the sector for larger investors.
"The first thing that we want to do with this fund is to institutionalize this sector," Barreiro explained. "A lot of people that invest in triple net, 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."
Fortec has already completed over $230 million in transactions across 13 states in the last five years. This new fund is designed to expand that footprint and create investment products that meet the risk and scale requirements of large institutions.
Looking Ahead: Essential Infrastructure
The perception of child care is shifting. It is increasingly viewed not as a discretionary service but as essential infrastructure, critical for enabling parents to participate in the workforce. This shift is supported by government funding initiatives, particularly those aimed at single and working mothers, which further solidifies the sector's financial foundation.
The combination of immense unmet demand, strong financial models, and growing institutional interest suggests that early education is poised to become a significant and formalized subsector of commercial real estate.
As more capital flows into developing new centers, investors are betting that closing the 6-million-child gap will not only address a critical social need but also generate substantial and reliable returns for years to come.
