The swing from 2022 to 2023 was dramatic: real estate sales volume fell from $484M to $162M as interest rates spiked, even while demand for childcare itself kept climbing.
Volume fell as rates rose
National childcare real estate sales volume dropped from roughly $484 million in 2022 to $162 million in 2023, a steep decline driven primarily by the rapid rise in interest rates. As financing got more expensive, cap rates inched upward and transaction activity cooled.
Yet the demand for childcare services never wavered — tuition rates had risen approximately 35% since 2019, and families continued to compete for limited slots.
The big operators kept moving
Even in a slower market, marquee transactions signaled institutional conviction. In June 2023, Bright Horizons announced the sale of 55 centers for $584 million; in August, Little Sunshine's Playhouse sold 12 properties for $127.5 million; and in October, KinderCare sold a portion of its portfolio for $166 million.
Bright Horizons itself posted a 20% year-over-year revenue increase from Q1 2022 to Q1 2023, reaching $554 million — evidence that operations were recovering even as the transaction market repriced.
The funding cliff comes into view
The report flagged what would become the defining structural story: with ARPA funding ending, more than 70,000 providers were expected to permanently close, affecting an estimated 3.2 million children — overwhelmingly the home-based and small centers that make up 95% of the market.
That contraction cleared the field for large operators and reinforced the scarcity value of existing, well-located real estate.
Find out what your school is worth.
A confidential, no-pressure valuation from a broker who has owned, operated, and sold childcare centers for 30+ years.
