Childcare Property Values vs. Small Office and Retail Conversions in Washington State (2015–2025)
Owner User vs. Investor Pricing in Washington Childcare Real Estate
Washington’s childcare real estate market operates as a category of its own. With licensing governed by DCYF and strong population growth across the Puget Sound region, demand for licensed facilities has far outpaced supply.
Owner User Sales
Most transactions in Washington are driven by owner operators seeking to secure control of their facilities. These buyers typically use SBA 504 or 7(a) financing and are willing to pay a premium for well located, licensed properties with outdoor play space. In King and Snohomish Counties, sales of operating childcare centers routinely exceed $350 per square foot, and in Bellevue, Kirkland, and Issaquah, purpose built facilities often sell above $400 per square foot.
Because there are fewer than 2,000 licensed centers statewide, and many are tenant operated rather than owner occupied, only a small percentage trade hands each year. Limited supply and high construction costs keep pricing elevated even as interest rates rise.
Investor Sales
Investment transactions remain less common but are growing. Long term leased properties to regional operators or national brands such as KinderCare or The Learning Experience typically trade between 5.5 and 6.5 percent cap rates in Washington, comparable to or better than other single tenant net lease assets.
Independent operators on shorter leases see a wider range, often 6.75 to 7.5 percent, depending on license size, credit profile, and building condition. In urban submarkets such as Bellevue, Redmond, and Kirkland, buyers are paying premiums for converted retail and office spaces that meet DCYF standards and already have functional outdoor areas.
Price per Square Foot Compared with Office and Retail
Childcare Properties
Across the Puget Sound region, most licensed childcare centers sell in the $325 to $425 per square foot range, with high quality purpose built centers occasionally reaching $500 per square foot. Converted office and retail buildings with licensing infrastructure tend to sell between $250 and $350 per square foot depending on improvements and location.
Small Office
Small suburban offices have weakened since COVID 19. In 2024, most sales in King, Pierce, and Snohomish Counties ranged from $175 to $250 per square foot, with older buildings or secondary markets such as Kent or Everett selling closer to $150 per square foot.
Small Retail
Neighborhood retail centers remain stronger than office but below childcare. Typical strip centers or small boxes trade around $225 to $275 per square foot, with limited appreciation over the past three years.
This means childcare facilities in Washington consistently command a 25 to 50 percent premium over small office or retail on a per square foot basis. Buyers value the specialized build outs, licensing continuity, and long term tenant retention that these assets provide.
10 Year Trend: Pre vs. Post COVID Performance in Washington
Washington’s childcare real estate market experienced both disruption and rapid recovery over the past decade.
Before COVID 19
Childcare centers in the Puget Sound region typically sold at 7 to 8 percent cap rates. Rent levels were modest, and many operators leased converted office or retail buildings at relatively low occupancy costs.
Pandemic Impact
Enrollment declines and temporary closures hit the sector hard in 2020. The state lost hundreds of licensed providers that year as margins were squeezed by staffing shortages and regulatory uncertainty.
Recovery and Expansion
Since 2021, enrollment has rebounded across most markets. Tuition rates have risen 20 to 30 percent since 2019, and waitlists are now common in nearly every Eastside submarket. With rising tuition and strong utilization, the financial capacity to support rent or debt service has improved.
Rising Values
Despite higher interest rates, most childcare property values in King and Snohomish Counties have either held steady or increased. Replacement costs for new facilities often exceed $600 per square foot, keeping existing licensed buildings in high demand. Transactions in 2024 averaged about $370 per square foot statewide, compared with less than $250 per square foot a decade ago.
Office properties, by comparison, have declined sharply in both value and absorption, and small retail has remained flat.
Why Childcare Real Estate Stands Apart in Washington
Washington’s regulatory environment, high land values, and limited zoning options make it exceptionally difficult to deliver new childcare space. As a result, the market behaves independently from traditional office and retail sectors.
For investors and operators, the takeaway is clear. Licensed childcare centers are not secondary uses of commercial property; they are a specialized, high barrier asset class defined by community need, licensing scarcity, and reliable demand.
The OFF MKT was built to provide visibility and structure in this unique market. By connecting verified buyers, sellers, and operators statewide, it helps bring transparency to a segment that is essential to families, yet often overlooked by traditional brokerage models.