Why are so many Developers failing at childcare centre development? | Mollard Property Group
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Why are so many Developers failing at childcare centre development?

Mollard Property Group have been actively involved in Childcare development for the past five years and we continue to see the same mistakes being made by developers. Below we will outline the reasons why so many current childcare Development Approvals will not eventuate, and the project will be abandoned. These abandoned projects create an illusion of oversupply. Whilst there are many areas that are over supplied, there are many opportunities if you know what you are looking for. Developers are skipping vital first steps and leaping straight into instructing their Architects to maximise the number of children that can fit on a site and design an amazing building; these will never be viable to build due to the economics of running a Childcare business.

 

DESIGN – A KEY MISTAKE
So many Developers fail to understand that child care is a business that relies solely on the local community to create income. It is essential to appoint an Architect/Designer who truly understands the workings, functionality and regulations that impact a childcare centre development and operation.

Childcare works within set daily fees that need to be competitive. In addition, they operate under a maximum licensed number of children, so no matter how successful the Operator is, they cannot double their income like a retailer or food and beverage outlet. Childcare is a highly regulated, staff-intensive business which is subject to very stringent Licensing regulations surrounding design and operation. There are different staffing requirements for different age groups, which effects room sizes and costs to run.

Incorrect room sizes and back-of-house allowances can have a serious negative impact on a project. Just to complicate it a little more, different locations may have different age group demands as well. Quality of competition, along with supply and demand, need to be analysed to determine the appropriate size of the centre and its room configuration. The typical residential formula of maximising a site does not work for childcare. We see many oversized centres being built, contrary to the supply and demand analysis, that will sadly end up failing.

 

MISTAKES IN A NUTSHELL
1. Failure to understand the childcare investment sector supply and demand.
2. Apply residential knowledge to the childcare sector.
3. Do not know how to determine if a site is suitable for a childcare centre.
4. Under-estimating construction costs.
5. Engaging an Architect to design a ‘generic’ and expensive childcare centre.
6. Failure to understand the complexities of licensing regulations.
7. Failure to understand the Operator’s unique design and operational requirements.
8. Unable to determine a realistic rental level.
9. Apply typical commercial lease terms, not customised to the business of child care.
10. Getting a Planning Permit before securing a Tenant.
11. Purchasing a property before securing a Tenant.
12. Try to maximise the number of children that will fit on a site, with no regard to supply and demand.

 

THESE MISTAKES ARE PREVENTABLE!
By working with Mollard Property Group, specialist childcare development consultants, your childcare projects will have reduced risks and quicker time frames, resulting in successful outcomes.

We truly understand the business of child care.

WHAT DO MOLLARD PROPERTY GROUP DO?
Mollard Property Group are specialist childcare development consultants.

  • We pride ourselves on presenting quality acquisition and development opportunities, which enable reduced-risk and successful childcare projects.
  • We source and secure sites suitable for childcare development.
  • We partner Developers with quality childcare Tenants.
  • We ensure the childcare Tenant is secured prior to committing to a site acquisition.
  • We complete compliant and cost-effective childcare building designs; from feasibility concept plans, to town planning and construction drawings.
  • We diligently manage the Town Planning process, to ensure a timely Planning Permit is achieved.

Childcare is a highly regulated and specialist field, requiring experienced management across all facets of the project; from concept design, town planning, through to construction. Our team is highly experienced, having successfully achieved many Town Planning Permits and managing the construction process, whilst ensuring the project is delivered on time and on budget.

10+ MILLION VICTORIA’S POPULATION BY 2051!
Demand for quality child care is continuing to grow across Victoria due to the rise in dual income households, as parents need longer care hours, and seek the best for their children. Where valuable social outcomes are achieved, and curriculum is developed to reflect the interests and developmental needs of every child. While areas in Victoria are experiencing an oversupply of current and upcoming centres, there are areas throughout Melbourne and regional Victoria that need quality, professional child care. Whilst there have been many Development Approval applications in the childcare sector in Melbourne, we recognise excellent business opportunities for Developers, Investors and committed Operators.

We are dedicated to working with quality childcare Operators and linking them with Investors, bridging the gap between Tenant and Landlord to ensure both parties have their objectives met.

 

BENEFIT FROM OUR 5 YEARS OF SUCCESS & EXPERIENCE
Since 2014, Mollard Property Group have been proudly responsible for the creation of more than 2,400 childcare places within the childcare industry. We have achieved a 100% success rate on Development Approvals.

And counting!

Developers, do not be deterred by your past mistakes. Get it right moving forward.

Step 1: Talk to Mollard Property Group.

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