CRE investors: Are you willing to look beyond the usual asset classes?
Here’s why childcare properties offer an interesting opportunity in 2026.
When investors think about commercial real estate, their minds typically go to multifamily, office, retail, or industrial properties. But there are plenty of other specialized niches hiding in the market. This month, we’re putting a spotlight on one worth watching: childcare real estate.
Childcare centers aren’t simply another type of commercial building. They require specific layouts, locations, parking, outdoor space, as well as regulatory approvals. That specialization can make them more complicated to acquire and finance. But don’t be intimidated — this is exactly why they’re worth understanding.
The need for childcare remains significant across the Northeast. Let’s discuss!
A real need. A specialized opportunity.
New York offers a striking example of the severity of childcare demand. A 2025 report from the State Comptroller found that 60% of the state’s census tracts were considered childcare deserts in 2023. Meaning, there were at least three children under age five for every available slot.
Connecticut’s numbers tell a similar story. A recent facilities analysis estimated a 30% gap between potential need and available childcare supply, with an especially significant shortage for infants and toddlers.
And in Pennsylvania, the state estimates that roughly 3,000 childcare positions remain unfilled — and that filling them could allow providers to care for another 25,000 children.
The takeaway for commercial investors? The need is clearly there, but successful childcare operations depend on much more than real estate alone. For investors willing to navigate the requirements, that gap could create an opportunity worth exploring.
“Childcare real estate is a specialized niche and that’s exactly what makes it interesting,” says Everest CEO and Chief Loan Officer Brooke Jacob. Investors who do their homework may find some lucrative deals beyond the traditional commercial market. The key is understanding not only the property, but also the operator and the licensing requirements. When those pieces align, there can be a compelling opportunity.
As always, Everest is here to guide you with a crash course in all things to consider when exploring the underserved childcare sector. Check it out and get in touch to talk more!
5 Things to Know Before Investing in Childcare Real Estate
1. It’s a Specialized Asset
It’s important to understand that a childcare center isn’t easily interchangeable with a traditional retail or office space. Operators may need classrooms, age-appropriate bathrooms, kitchens, secure entrances, outdoor play areas, and adequate parking. That specialization can make these properties harder to repurpose. It also narrows the pool of suitable properties for competing childcare operators.
“Specialization cuts both ways,” says Brooke. “It can limit a property’s alternative uses, but it can also make a well-located, properly configured facility particularly valuable to an operator.”
Financing can also differ from a conventional office or retail deal. Lenders may pay particular attention to the property’s specialized use, operator strength, lease terms, historical cash flow, and alternative-use value. Investors are wise to discuss financing early — before getting too far into a transaction.
2. Demand Supports Tenant Stability
Parents don’t typically choose childcare centers based on square footage or a property’s curb appeal. Location, convenience, reputation, and availability all matter, and once families find a center that works, they have little incentive to move.
Knowing the immense childcare shortage that exists in 2026, this creates a promising dynamic for investors. If a facility is optimally located and the operator has an established track record, the opportunity to buy could be a home run.
Mrs. Jacob adds, “Of course, we’ll also look at lease structure, the property itself, and the surrounding market. Everything needs to make sense together.”
3. Location Really Matters
For these properties, being near residential neighborhoods, major employment centers, commuter routes, and family-oriented communities can be a major advantage. A center that’s convenient for parents on the way to work may have a very different investment profile than a building that’s similar but difficult to access.
Investors should also weigh whether the surrounding population supports the type of childcare being offered. Infant and toddler care, for example, can have different space and staffing requirements than preschool or school-age programs.
4. Due Diligence Gets More Complicated
This is where childcare properties differ from a standard commercial acquisition.
Before moving forward, you should investigate zoning, permitted use, licensing requirements, building and fire codes, parking, outdoor space, environmental considerations, and any required renovations. State and local regulations can also dictate everything from classroom size to occupancy and outdoor play requirements.
For instance, the State of New Jersey has moved toward aligning preschool and childcare standards, including a proposed 42-square-foot usable-space requirement for newly licensed childcare centers, while many existing providers would remain grandfathered under prior standards.
5. The Property is Only Part of the Investment
Finally, a childcare property is more than bricks and mortar. The strength of the operator, lease structure, and long-term plans for the space can all add to its investment appeal.
We encourage our clients to consider factors such as operators’ experience and financial health, the length and terms of the lease, renewal options, and plans for the property’s continued use or alternative purposes down the line.
Mrs. Jacob notes, “The building is just one piece of the puzzle. An experienced loan officer can help you see the opportunity from all angles.”
A Niche Worth Knowing
Childcare real estate isn’t necessarily for every investor, and its specialized requirements mean it deserves careful analysis. But for those looking to expand their portfolios beyond multifamily, it represents an intriguing niche where limited supply meets a very real community need.
With childcare availability remaining a challenge across parts of New York, New Jersey, Connecticut, Pennsylvania, and beyond, investors may want to keep this asset class on their radar.
Sources: ¹ OSC.NY | ² CT.GOV | ³ PA.GOV | ⁴ NJ.GOV
Everest says:
Invest outside the box
Looking Beyond the Ordinary
Since 2004
Considering a childcare property — or any other specialized CRE investment?
Talk to Everest before you make your next move.