Selecting the Right Site To Optimise Your Future Childcare Sale Value
By Michael Vanstone, Sydney
With the importance the government places on the childcare sector and to the wellbeing of the economy, there is overwhelming bipartisan government support both federally and at the state level toward the childcare sector. The industry has seen enormous growth and is now interwoven into the fabric of the community and provides an essential service to all levels of society.
With many years of experience involved in the sale of childcare properties; I have gained an unparalleled understanding of what childcare operators are looking for when sourcing and selecting suitable sites. The process of choosing a site can be stressful and costly if it does not match the needs of the childcare operator or local area demographics are weak, after it has been approved. The DA Approval process can take anywhere from 3 – 9 months and cost from $60,000 to $100,000. The subsequent process and cost can further exceed this if you have to go through the Land & Environment Court, therefore, it is essential that you choose the site based on a combination of the site selection fundamentals mentioned below.
Developers generally source sites suitable for childcare through their relationships with sales agents, such as Burgess Rawson. A developer will firstly get the site DA Approved and then build it or on-sale to an operator or entrepreneurial investor looking to add value. One thing I have to mention is, not all sites are created equal with the following fundamentals being the ingredients for success.
Site Selection Fundamentals
- Location, Location, Location – The location will define the success of the site for an operator, which should encompass a balance of the flowing fundamentals
- Exposure to Passing Traffic – A busy wide street is essential for solid traffic flow and will also provide excellent free advertising due to exposure
- Trade Area Demand – Undergo some high-level due diligence of the area to see how many centres there are in the area and the proportion of children under five years old
- Supply of New Licenced Places – Adjust your trade area demand research to include new centres under construction and then forecast the imminent supply of licenced places that could be delivered to the trade area. Note: not all DA Approvals advance to the construction of a childcare centre
- Proximity to Schools – Being close to schools is vital for parent convenience during drop-off & pickup times
- Daily Childcare Fees – Will set the quality of offering by the childcare business
- Design & Building Costs – Good design will provide the best possible chance of optimising the future sale value
- Size of Block – Will determine how many licensed places you are likely to get approved. Optimising licenced places is especially important with high valued properties such as metro located properties. If you have to build a basement carpark ensure the additional cost does not outweigh the benefit of the additional licenced places.
- Local Demographics and Socio-Economic Factors – Ensure the service offering matches the local demographics, which could be based on income, employment drivers or new housing growth in the local area
- Funding Costs – How long will it take to get approved and what are my funding costs likely to be
For more information contact:
Michael Vanstone, Associate Director Sydney – Childcare Specialist 0403 580 528