America's child care crisis costs the economy an estimated $172 billion each year in lost earnings, productivity and tax revenue. Nearly half of young children in the United States live in communities where the supply of licensed child care falls far short of demand. Yet while considerable attention has focused on what families pay for care, far less has been paid to a more basic constraint: in many communities, there simply are not enough classrooms. Those price pressures are steep in absolute terms as well: in many states, the annual cost of center-based care for an infant now exceeds in-state tuition at a public four-year university, according to analyses of provider pricing data.

The ramifications extend well beyond the doors of a child care center and reach directly into the workforce. In a national poll conducted for the First Five Years Fund, 59% of part-time or non-working parents said they would return to full-time work if they had access to quality child care at a reasonable cost. Separate polling found that 52% of voters said they or someone they know had missed a shift or reduced their working hours because of a child care problem.

For employers, those individual decisions add up. When parents cannot find reliable care, businesses lose available workers, employees miss shifts, and experienced professionals scale back careers they might otherwise continue. America's child care crisis is therefore more than an affordability problem — it is also a supply problem.

The author of the commentary, who has spent years helping early education operators find and build the facilities they need to grow, describes a strange contradiction: operators can have families waiting for seats and still struggle to secure the real estate and capital necessary to open another school.

The author also discloses a financial interest in the issue. Fortec, the author's company, develops and invests in early education real estate and manages a fund that invests in the sector. The author believes more institutional capital should enter this market and that the company may benefit as the sector attracts additional investment. At the same time, the author writes, experience investing in the sector has revealed the scale of the supply problem — and why solving it will require far more capital and development than any one company can provide.

Families need more options. Operators see demand and want to expand. But turning that demand into a functioning school requires something the child care conversation often overlooks: land, buildings and investment. The piece draws a comparison to housing policy: the country would never address a housing shortage by focusing only on rent subsidies while ignoring the need to build more homes, yet that is often how child care is approached. Financial assistance can help a family pay for a seat, but it cannot create one where a classroom does not exist.

Part of the reason more capacity has not been built, according to the commentary, is that early education has historically fallen between categories in the investment world. Investors know how to evaluate apartments, warehouses, shopping centers and office buildings because those sectors have decades of data behind them. Child care centers are more specialized, and the market has never developed the same depth of familiarity or transaction history investors rely on elsewhere. That has made the sector easy to dismiss as too niche, even when the underlying demand is hiding in plain sight: growing numbers of young families, schools with waiting lists, operators seeking additional locations, and communities where available seats have failed to keep pace.

The piece points to precedent in other sectors. As e-commerce expanded, institutional capital poured into logistics facilities. The rise of artificial intelligence has driven billions of dollars toward data centers. Housing shortages continue to place multifamily development at the center of national economic discussions. Early childhood education has its own persistent supply-demand imbalance; the difference is that investors are only beginning to recognize it.

Even a strong education operator may lack the capital or real estate expertise needed to open a new facility. When the real estate side of the equation breaks down, expansion stalls even when families are waiting for seats. The consequences also extend to communities trying to attract employers and young families: just as roads, utilities and housing are planned because businesses and families depend on them, early education belongs in that same conversation.

The public side of that equation is also in motion. The $24 billion in federal stabilization grants created under the American Rescue Plan — money that helped providers keep their doors open through and after the pandemic — expired at the end of September 2023, and a number of states have since put forward their own replacement or expansion programs. In Washington, bipartisan proposals such as the Child Care Workforce and Facilities Act have sought to direct existing federal economic-development tools toward building and renovating child care facilities.

Child care is often discussed as a household expense or a social service. It is both, the author argues, but it is also workforce infrastructure. America has spent years debating the cost of child care while millions of families continue competing for a limited number of seats. Creating more of them will require strong providers, public support and significantly more private capital. For investors willing to understand the sector, early education offers a familiar business equation: persistent demand and constrained supply.

America's $172 billion child care problem will not be solved by real estate alone, the commentary concludes — but it cannot be solved without it.

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