Early Education Centers Could Spell Strong ROI for Retail

Beyond the dollars, childhood care facilities are essential to any thriving community and a necessary amenity desired by parents, according to Jo Kirchner and Travis Waldrop of Primrose Schools.
LtoR: Jo Kirchner & Travis Waldrop

Every developer knows that the key to ensuring profitability in a shopping center is carefully selected, quality tenants that will drive plenty of foot traffic. As consumers gravitate towards ecommerce, however, it has become increasingly difficult to secure brick-and-mortar anchors that can withstand their digital competition.

There is one sector, however, that has proven capable of enduring the tech revolution and supporting its surrounding retail neighbors, and that’s early childhood education.

New Building Blocks 

Where other goods and services are falling at the hands of digital retailers, early education is proving more profitable than ever, currently comprising a rapidly growing $57 billion industry, according to IBISWorld. Beyond the dollars, childhood care facilities are essential to any thriving community and a necessary amenity desired by parents.

Over the past 20 years, women have made major strides in the workplace and traditional caretaker roles have shifted. There has also been widespread support and research surrounding early childhood development. As a result, the pressure has been put on communities to offer high-quality early education and care options, and these schools have become a solid anchor for commercial real estate owners looking to bring in consistent foot traffic. Primrose Schools, for instance, has the potential to attract 150 to 200 high-income parents to each of the 400+ properties twice a day, five days a week. Many Primrose parents Millennials, who are just now creating families of their own and seeking quality education and care.

Another factor that has contributed to the rising need for early education and care are young families relocating from urban cores to more affordable suburban and ‘surban’ areas—neighborhoods just outside the city center that combine the perks of urban living with suburban affordability. The result is a currently unmet demand for access to high-quality early childhood education in many of these up-and-coming areas.

Nashville is a prime example of a rapidly growing metropolitan area with a large population of small children and Millennial parents. According to the U.S. Census, there are more than 45,000 children under the age of five living in Greater Nashville and, considering the city’s largest age group is 25-29 years old, that number is only expected to grow. The city’s ‘surban’ neighborhoods, like Sobro, The Nations and Nashville Yards, have become hot markets for young families and, consequently, are in need of quality early education and care options. The same can be said for Boston, one of the most expensive cities in the US, where parents with high spending power are flocking to popular suburbs like Lexington, Burlington and Newburyport.

Developers are starting to notice the growing demand in these areas and are working to attract and build early education facilities like Primrose Schools, which currently has five new locations in their pipeline in Nashville and eight in the works in the Boston area.

In addition to being a valuable amenity for communities with young families, early education providers often have flexible site requirements, making it easy for developers to break into high-barrier-to-entry markets with a quality, long-term tenant.

Live-Work-Play-Learn

As real estate developers look ahead to 2020, it is imperative to know which investment trends are shaping their target regions and amenities that attract new businesses and happy residents.

Within the increasingly competitive commercial real estate sector, early education and care facilities have consistently grown sales and proven capable of withstanding market volatility. These facilities also promote loyalty to an area. Parents drop off and pick up their children twice a day, five days a week, which adds stability to an ever-changing environment and creates a sense of community. Owners looking to build and operate profitable shopping centers must incorporate brands that support a neighborhood’s larger vision, and those who recognize how early childhood education facilities can complete that picture will thrive.

Live-work-play-learn is the lifestyle of the future, and it’s how CRE owners can stay ahead of the curve in years to come.

Jo Kirchner is CEO of Primrose Schools. Travis Waldrop is vice president of Real Estate.