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Is Childcare the Next Big Move for Real Estate Owners?

One of the most significant impacts of COVID-19 has been the loss of childcare services for working parents. With coronavirus cases increasing in more than half of states in August, school districts around the country are planning for partial in-person or full-time remote learning this fall. At the same time, many daycares have closed or operating at a limited capacity — and demand for childcare has grown to the point where new childcare programs are opening and filling immediately.

JLL – one of the largest real estate firms in the world with 94,000 employees and counseling clients in more than 80 countries – just released a new report exploring the state of childcare during back-to-school (BTS) season. The results of the study reveal a major need for childcare if parents are to return to the office.

This is how COVID-19 has made childcare almost impossible to access for some — and how real estate businesses may be able to rise to meet parents’ needs.

COVID-19 Limits Childcare Options for Parents

JLL’s new research highlights the challenges of balancing distance learning and childcare during COVID-19.

The report found that “in the U.S., 34 million workers (one-quarter of all employees) care for at least one child under the age of 14.” Normally, many of these children would be returning to school for the fall semester. Now, however, this isn’t the case in many districts.

Schools are not just centers of education, but also de facto childcare centers. For many parents, distance learning could prevent them from returning to the office altogether. Going off of current plans for school re-opening, “up to 25 million office-using employees may not be able to return to their offices due to childcare issues,” according to JLL’s report.

For those who stay home, schools closures are still likely to have major impacts on their work. Some parents may be forced to reduce their hours or switch to less demanding jobs that allow them to spend more time looking after their children. Others may be forced to stop working altogether.

The good news is that daycares are slowly returning, even if schools aren’t. As part of the broader reopening of the economy, many daycares that shut their doors in March are now back open.

How Real Estate May Help Parents With Childcare

Working parents need childcare, and the research shows that there is major demand not met by current supply.

For real estate companies, now may be the time to invest in childcare. It’s likely that the demand for childcare will continue to be high through the fall, if not the rest of the school year. A timely investment in a childcare center could both help meet the rising demand while providing a good chance of a return on investment.

Some real estate companies are already experimenting with childcare programs. In Northern Michigan, for example, the real estate cooperative Commongrounds is launching a feasibility study to investigate bringing childcare to the area in the form of the Wildflower Schools program. These schools are “decentralized Montessori micro-schools” that aim to serve a handful of students.

For real estate companies considering an investment in childcare, efforts like that one could provide a valuable model to follow. Teaming up with local projects to expand childcare in the area could be valuable both for real estate companies and their community.

However, there are also reasons to believe that childcare may be a somewhat risky investment for the foreseeable future. Daycare centers and other childcare providers aren’t immune to COVID, and even one or two cases could prompt a shutdown. For any business right now — and especially newer programs — this could spell serious trouble. At the least, it may significantly impact the daycare’s ability to stay afloat for long enough to reopen safely.

Push to Online Learning Means High Demand for Childcare

This fall, few students will be returning to in-person classes. Schools are likely to continue distance learning through the rest of the semester — and possibly even the rest of the year.
Because schools are both education centers and centers of childcare, the push to online learning has working parents in a rough place. Real estate companies and investors may be able to take advantage of the moment and provide a valuable community service by investing in new childcare programs.

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