Higgin's childcare centre the latest in a string of development applications

A string of development applications for childcare centres in Canberra suggests the centres have become as popular with investors as they are with busy parents.

An application for a 187-place childcare facility in Higgins is the latest in a spate of DAs at suburban centres.

Knight Frank’s ACT associate director of commercial and office leasing Daniel McGrath sold the site at an auction in March for $2,605,000.

The 4575-square-metre block was hotly contested with 145 parties vying for the property. The eventual buyer was an investor from Sydney.

Mr McGrath said data showed childcare is a growing industry and Canberra centres were particularly appealing.

“We have some of the highest rates of childcare enrolment and the highest fees nationally, which makes ours an attractive market,” he said.

Since 2004, the number of children enrolled in long-day care had risen by 31 per cent, Mr McGrath said. However, there has not been a corresponding total increase in the number of available places.

“This provides a fundamental platform to support ongoing growth in the sector.”

Childcare leases were attractive to investors as the operator usually took care of building maintenance and operational costs.

“An investor getting a 7 per cent return on their childcare centre investment is getting a true 7 per cent return,” Mr McGrath said.

“There is also a tendency for leases to be of a long-term nature – 10 to 15 years – and protected against inflation.”

An application for community facilities including a 120-place childcare centre in Coombs was lodged with the ACT Planning and Land Authority in March.

A childcare centre in Googong was given the green light by the Queanbeyan City Council in May.

Mr McGrath said there was also strong consumer demand for on-site childcare facilities, presenting an opportunity for owners tackling high-vacancy rates.

“Some operators with a presence in Canberra have a great track record of converting office space to childcare centres in markets like Sydney and Melbourne. 

“Converting existing office space and adding childcare as a permitted use under the Crown lease does not attract any lease variation charges, providing a financial incentive for owners to think creatively about their vacant buildings.”

On-site childcare would also give the building an advantage when attracting other prospective tenants..

Mr McGrath said he had seen several major site sales in the past couple of years, however there have been few transactions for established childcare centres.

“We believe we have reached a point in the cycle where we will start to see childcare investments offered to the market, largely as a result of the strong yields being paid nationally for this type of asset.”