Childcare Centre 3.5 hours from metro Melbourne

7 June 2024

Another childcare centre has been leased off the plan by CBRE’s National Healthcare and Social Infrastructure business this time in the regional Victorian suburb of Warrnambool.

Located 3 hours from the Melbourne CBD the result is a clear example of the mounting pressure on childcare providers to raise rental to make the development of new services feasible under current economic conditions.

CBRE’s Sandro Peluso, Marcello Caspani-Muto and Jimmy Tat brokered the lease which achieved an annual rental of $385,200 (or $3,600 per place).

The lease was struck on a 20 year initial term plus options and is poised to be the first modern service constructed for the catchment in near 10 years. Existing services in the town centers have long operated at close to full capacity with extensions even required in some instances.

Marcello Caspani-Muto said “As a number of developers seek regional alternatives for new centre development due to challenges with feasibilities across metro locations is it critical two factors are considered. The first is the demand ratio which the team have widely touted for years. But what is now trumping this even more so is the ability to attract and retain staff in a catchment.

In this instance, Warrnambool is a substantial regional market that has sufficient staff catchment from the major and minor surrounding township and multiple potential operators had confidence in staffing the service close to full capacity within a short period of completion.

Sandro Peluso added “In relation to competition within the area, there is a small selection of competing services, with the main for profit provider being the most successful and charging notable daily fee rates of up to $159 per day. First mover advantage in a market like this is critical as it’s clear there is immediate demand for another one or two services in the area which this center will cater toward.”

This result follows numerous successful outcomes across metro and regional locations for the CBRE team who believe existing building conversions will be the next notable trend in the childcare leasing market as providers seek additional offerings in metropolitan Melbourne locations with speed to market being critical.