Real estate developers: are you prioritizing child care tenants in your units? Are you considering child care as an apartment amenity in your new builds? I’m going to take the bold stance and share: you should be. As a CEO in the child care business industry, a Wharton graduate in Real Estate, and an individual with experience in apartment complex equity building, I have a unique perspective on integrating child care into real estate. My daily work provides a firsthand look into the exponential potential that child care holds for real estate developers.
Below, I’ll share two thoughts on why child care tenants are ideal for increasing rental income while positively impacting both families and the economy. I’ll also share a few tips on how you can start integrating child care today.
Thought #1: Child Care Businesses Are Ideal Tenants in Mixed-Use Developments
If you have commercial space available in a mixed-use development, consider renting it out to a child care provider. This can be a particularly wise decision for several reasons:
- Lower Tenant Improvement Costs: Compared to restaurants or bars, child care facilities cost less to renovate. This means less upfront investment for you as the property owner.
- High Demand and Stability: Child care is in high demand, and a good operator can become a long-term tenant. Child care providers typically generate significant foot traffic, which can also benefit other commercial tenants in your building.
- Location-Based Appeal: Parents often choose child care providers based on their home or office proximity. Location-based businesses are less likely to falter during economic uncertainty.
Thought #2: Child Care Businesses Are an Excellent Amenity for Apartment Complexes
Adding child care facilities to apartment complexes is a forward-thinking strategy that can significantly benefit both residents and developers:
- On-site child care can be a strong selling point in densely populated areas, where families typically struggle to find convenient and affordable child care options.
- Marketing child care as an amenity can attract families looking for convenient, high-quality child care close to home.
- Convenient, family-friendly amenities like on-site child care can help reduce tenant turnover rates.
- The addition of child care providers can decrease the economic impact of the child care crisis in your area.
Four Ways to Start Integrating Child Care as a Real Estate Developer
Now that you’ve seen the potential, it’s time to think about how you’ll find and manage child care tenants. I’d recommend beginning with these four tips:
- Promote Support for Child Care Providers: Start by informing your existing tenants that you support the idea of creating child care facilities within your building. Make it clear that you're willing to help interested tenants navigate the licensing process and won't obstruct their efforts to get started. Wonderschool can assist these aspiring providers in getting their child care businesses up and running.
- Public Outreach and Community Engagement: Consider making a public announcement or working with community leaders to express your commitment to fostering child care in the region. By positioning yourself as a community-oriented developer, you can attract families and child care providers who need space to operate.
- Offer Flexible Leasing Options: Develop creative leasing strategies to encourage child care providers to set up shop in your building. This could include waiving security deposits, offering income-sharing agreements, or partnering directly with providers to help them get established. Flexibility in leasing terms can be a significant draw for providers who might otherwise struggle to find affordable, suitable spaces.
- Ensure Proper Licensing and Insurance: It's crucial to ensure that any child care provider operating in your building is fully licensed and insured. Additionally, you should be listed as an additional insured on their policy. While I’m not a lawyer or accountant, I recommend working with legal and financial professionals to ensure compliance with local licensing regulations and protect your interests.
With thoughtful planning and partnership, you can make a meaningful impact while enhancing the value and appeal of your properties. Prioritizing child care tenants will help you meet a critical community need, attract and retain family tenants, and create stable, long-term rental income.
If you’re looking for a partner organization to help you optimize child care leases, reach out to Wonderschool today. My team and I would be thrilled to help you make an impact not only on your portfolio but also on your local economy.
