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Child Care - Game Changer for Commercial Real Estate?

Child care has always been a challenge for working parents and COVID only exacerbated an already dire situation. ‘Child Care Now’ reported that there are only enough licensed child care spaces for one in four children under the age of 6 in Canada and this was prior to the pandemic. Since then, we’ve witnessed the mandated closures of many facilities and child care workers leaving the industry in droves.

Not only aren’t there enough spaces, there is a shortage of qualified workers with the willingness to return and quality care remains unaffordable even for middle income families. Toronto had the highest average child care costs for infants in 2021, coming in at over $1900 per month and understandably, putting it way out of reach for many families.

Women were disproportionately affected during the pandemic; they still bear the main responsibility for child care and the lack of options combined with two years’ of lockdown measures meant working mothers represented a growing group of Canada’s workforce forced to quit their jobs permanently.

Solving the Child Care Crisis

The pandemic highlighted the very real problems working parents face in trying to access suitable child care and the Canadian federal government has been under increasing pressure to make lasting changes. These changes must make quality child care more affordable and open up spaces whilst valuing the contribution of early years’ childcare workers through fair pay and professional development; in theory, there should be a positive impact on small businesses who are struggling with labor shortages as well since the labor pool opens up again.

The good news on the horizon is that the federal government tabled a national child care plan in 2021 with some ambitious targets to alleviate the burden on working parents and make it worthwhile for people to return to work and get the economy growing again. The plan aims to reduce child care costs by half by the end of 2022 and longer-term be able to provide parents with $10 a day services by 2025. There hasn’t been anything like this proposal since the national education system began and the response was initially skeptical given that any federal proposals need provincial buy-in and that kind of collaboration has been very difficult to achieve historically, with negotiations often falling at the last hurdle.

With a $30bn commitment from federal to provincial, Canada’s leadership don’t seem to be letting jurisdiction issues get in the way and have already pushed ahead and negotiated with 9 provinces or territories to halve child care costs by the end of this year. This is welcome news to the ears of parents trying to keep ahead of spiraling inflation and a burgeoning cost of living crisis.

Creating Value with Quality Child Care

Employers are well aware that it will take something different to get people back to a physical office location and mindful of the top concerns for working parents, many are already looking for creative ways to incorporate child care into their office buildings.

There are companies that have been offering on-site child care as an employee benefit for years such as the L’oreal Canada Distribution Centre in Quebec which opened its doors in 2002. The daycare centre welcomes children of employees working at the distribution site, plant and nearby head office and has gone from serving 37 to 67 children in the time they’ve been open.

Far from being a lack-luster place to drop off your kids while you work, the centre has won awards for its approach to children’s holistic wellbeing, exemplifying what can be achieved when you focus on quality care and ensuring parents go to work reassured that their kids are in a happy and caring environment nearby.

Quebec has been something of an anomaly in Canada’s ailing child care system however, known for its superior offering and affordability with other provinces lagging behind on all fronts. This sort of facility has only been accessible to a small segment of the working population up to now, namely those of much bigger businesses that were in a position to do it.

Integrating Child Care and Commercial Real Estate (CRE)

An on-site child care centre at the office could just be the unicorn benefit employers need to attract parents back and office buildings aren’t the only ones that might benefit from this approach; the healthcare industry is suffering a labor shortage like never before and engineering and manufacturing firms who are also losing their aging workforce need to think seriously about how they attract more women and youth into the industry. Assigning some of the building to early learning and daycare is a strong signal that the organization genuinely cares about its employees and wants to support them with flexible solutions that address their biggest concerns.

From a CRE perspective, on-site child care won’t be appropriate for every office building. There are very specific requirements for zoning and layout of these centres and they’re required to have a certain amount of outdoor space and storage, food preparation and eating and resting areas for both staff and children and not all buildings will easily or cost-effectively lend themselves to this purpose.

It’s also important to consider the location of the building and how feasible it is for parents to get there with infants and toddlers. It may be preferable to have day care closer to home and not have to endure a commute on public transport with preschool age children. In this respect, subsidized child care might be more appealing than an onsite facility so that parents may opt for a more suburban setting.

Despite there being much to consider, creative employers are finding ways to offer child care benefits and property owners must also think creatively about how they attract these tenants. Whilst a dedicated facility on site might not be feasible, there are approaches that may be combined to give employees the choice and flexibility of benefits they require…

  • Think about partnering with a daycare business as a tenant - they get a purpose-built space which allows them to expand their operations with a ready-made customer base.

  • Multipurpose spaces may allow for an area to be used in different ways over the day and week to maximize its utilization. A large open daycare room could accommodate evening events and childrens’ classes or even open up on evenings and weekends as a ‘drop-in’ amenity for those that need ad-hoc child care or work unsociable hours.

  • Although a smaller employer might not have the need for a fully fledged space themselves, forming employer groups that can collaborate on investments into local daycare providers could be a smart way to share cost and amenities between businesses.

Child Care Change is Inevitable

Whether employers press forward with a return to office mandate or continue with hybrid working arrangements, child care is essential for workers in all industries and it’s vital for the economy.

With the introduction of a Canada-wide child care system, hopes are high for more accessible and affordable care for all, however shaking up a convoluted decades-old system won’t be without its challenges. Ontario was the last province to accept the federal funding on offer and the early signs are that not much more than half of Toronto’s daycare centres had opted into the program which is disappointing for the parents hoping to benefit.

The slow uptake of Ontarian child care providers will likely mean parents will move away from them and from unlicensed providers to those that are able to cut their expenses in half by new year 2023. Affordability aside, enrollment in the national child care program will do nothing to increase the number of daycare spaces available and this presents an opportunity for landlords and property owners to set themselves apart.

Employees will be drawn to companies that offer a range of benefits to suit their individual parental needs and family circumstances; quality, affordable, workplace child care options could well be a saving grace for employers, child care providers and investors alike, particularly if we’re now in the realms of a recession.

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