Childcare is often called recession-resistant. The reality is more nuanced — and understanding the nuance is what separates good underwriting from wishful thinking.
The case for resilience
Care is essential for working parents, who need it even in downturns. Demand proved durable through the pandemic, and government support underscored the sector's importance — all reasons investors treat it as defensive. Tellingly, prime-age women's employment reached record highs in the years after the pandemic, driven by mothers of young children, which keeps formal childcare demand structurally high.
Long, net leases backed by creditworthy operators add another layer of income stability.
The honest caveats
Resilience is not immunity. Job losses can soften enrollment at the margin, and operator-level pressures — labor costs, the funding cliff — affect the rent's safety. The asset is only as defensive as the center underneath it.
This is why credit quality, lease term, and rent coverage matter so much: they determine how much of the 'recession-resistant' story actually protects you.
Underwriting it properly
Treat recession resistance as a function of the specific asset — its location, enrollment, operator, and lease — not a blanket sector trait.
We help buyers and sellers separate durable assets from those that only look defensive on paper.
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