No Kidding: Calgary Can’t Build Enough Daycares to Meet Demand

Calgary doesn’t have nearly enough daycare facilities to satisfy the voracious demand from working parents.

Alberta’s signing of the Canada-Alberta Early Learning and Child Care Agreement in 2021 revolutionized daycare, bringing down the costs considerably. The province has vowed to spend $185 million to support the creation of up to 68,700 licensed childcare spaces by 2026; so far 47,000 spaces have been created.

Then there’s Alberta’s population boom, which brought 70,000 new residents to Wild Rose Country in 2023, many of them families needing daycare.

“In-migration has been a huge driver of demand for daycare space,” says CBRE’s Alistair Corbett, who alongside his colleague Cory Miles is seeing a flurry of activity as a result. Their team has signed 13 leases for daycare facilities in the past year.

“We’ve never seen anything like the number of inquiries we’ve received for daycares.”

Mini Anchors

Their team leases Sage Hill Quarter in Northwest Calgary which has a 25,000 sq. ft. Active Start daycare that Corbett says acts as a “mini anchor” for the plaza.

“Having a user of that size sets the stage for the development being very child-friendly. And we’ve used that user to bring in other child-oriented users, including dance, taekwondo, music lessons, Oxford Learning Centres, preschool, an ice cream shop and most recently a big kids play and activity centre called Cloud Land.

“It’s added a layer of users that wouldn’t typically look at a retail centre.”

Corbett and Miles brought a Little Steps daycare to a highly sought-after grocery-anchored shopping centre in Carrington, a burgeoning community in Northwest Calgary.

“With the addition of the daycare we were able to attract other child-oriented users like martial arts and a Kumon Learning Centre,” Corbett says. “The demand for childcare in the area was so high, that the business was completely full and opened their doors with a waitlist of children. To this day, they wish they had twice as many square feet.”

At Discovery Ridge, a daycare tenant Corbett put into a small second floor space in 2014 expanded in 2022 to double the space by taking an adjacent unit. They then took another space on the main floor in 2023. “They keep expanding,” says Miles. “The childcare supplement really took that business to a new level.”

Daycare Evolves

Daycares used to be low-key, smaller, community-oriented operations that were often based out of people’s homes, church basements or spare classrooms before and after school hours.

“They weren’t viewed by landlords as a desirable tenant like they are today,” says Corbett. “A daycare couldn’t pay a lot of rent, and it needed outdoor play areas, which uses up land that’s expensive in Calgary. And also, it’s not easy for landlords to retrofit space to meet daycare requirements.”

Things eventually evolved to the point where parents were prepared to pay substantial amounts to get their children into quality childcare centres, recognizing the role daycares could play in helping prepare children for success in elementary school (and in many cases so the parents could both go to work).

“Daycare moved to a different model,” Corbett says. “Services and systems improved, and there were larger spaces with more features – somewhere you wanted to drop off your kids.

“Daycare providers raised their game and raised prices, and with the rise in prices began a search for more opportunities in traditional retail space.”

Landlords Warm to Daycare

Corbett saw a big shift in the mentality of landlords once they recognized the benefits daycares could provide as mini anchors for their malls, attracting traffic and other businesses.

“Our practice is mostly suburban grocery-anchored centres,” he explains. “So if someone has got a 5,000 sq. ft. space, with an adequate outdoor play area, it means 90 to 120 kids are being picked up and dropped off by Mom and Dad, twice a day, morning and evening.

“That provides a nice synergy. Because they might go pick up coffee, grab some food, or do something at the grocery store.”

That daycare operators can pay higher rents for big spaces was not lost on shopping centre landlords, either. “Daycares moved up in the pecking order,” Corbett says. “They’ve become a more desirable tenant and landlords have begun accommodating them, seeing them as improving and stabilizing their assets.”

“I got a call this morning from a developer looking at kicking off a new project with a 14,000 sq. ft. daycare space,” he adds. “The daycare is being envisioned as one of the project’s anchors.”

Spaces Hard to Source

Miles says his team is selective about the daycare groups it entertains on behalf of its landlord clients.

“Finding a space with an adequate exterior play area that also meets provincial licensing requirements is quite tough now. That’s why we have to be picky; when a daycare space becomes available, we have so many good quality groups with existing operations that are also in expansion mode that will look at the space.”

Competition for daycare space is so fierce these days that Miles says they’ve been putting prospective tenants through a request for proposals process to help narrow down the list. “You learn so much about a group’s motivations, experience and financials when you go through an RFP process. It’s very interesting.”

“In the end,” adds Corbett, “we make things happen and develop good partnerships with landlords and tenants.”

Tall Order

After a three-year construction hiatus, construction is underway on a number of retail projects in the city, and increasingly landlords are planning upfront to accommodate the needs of daycare tenants, designing spaces with plenty of light and that allow for outdoor play areas.
But hitting the province’s target for daycare spaces could be next to impossible, Corbett says.

“When you’re talking about needing another 20,000-plus spaces but you’re only knocking them out 150 at a time for an average sized location, it really highlights the enormous challenge of how many of daycares you have to find or build, particularly when most of the low-hanging opportunities have already been done.”

Government Funding

The model for funding subsidized childcare has changed a number of times, creating uncertainty among the childcare providers. Most recently the government amended the rates parents are required to pay per month to $326, which further increased demand for new locations.

“They have also put heavy limitations on affordability grant funding, so groups are switching to not-for profit models to be eligible for the funding grants,” says Miles. “Despite the uncertainty of the funding, working parents still need childcare and there are lengthy waitlists for spaces.

“This isn’t child’s play.”