2024 was a year of recalibration for childcare real estate: cap rates held in the mid-6s, deal timelines stretched, and the end of pandemic-era funding began reshaping the supply side.
Pricing held, but the clock slowed down
Across the national childcare comps we tracked, the average cap rate settled around 6.6% with an average sale price near $3.6 million and pricing around $376 per square foot. The headline story wasn't price — it was time. Months-to-sale stretched to roughly 7.2 months, up sharply from a three-month low in 2022.
Rising interest rates were the driver. As borrowing costs climbed, cap rates inched up and buyers grew more selective, lengthening the path from listing to close even as values stayed broadly intact.
Tuition outran expenses
One of the most striking dynamics: tuition rates ran roughly 30% above pre-pandemic levels — a historic increase in just three years. Even with payroll and construction costs higher than before, tuition rose disproportionately, supporting operator revenue.
At the same time, pandemic grant funding that had propped up revenue began running out, setting the stage for the supply contraction that would accelerate into 2025.
Scarcity became the story
More than 30% of American families were living in a childcare desert, and roughly 15,856 providers had permanently closed since the pandemic began. Every closure made the remaining purpose-built, well-located centers more valuable.
That scarcity — irreplaceable assets serving an essential, recession-resistant need — is what kept investor demand for triple-net childcare opportunities firm through a rising-rate environment.
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