The province of Ontario recently announced a program to drastically reduce the quotidian cost of childcare to $10, but its implementation in Toronto won’t be without its challenges.
The program runs through March 2026 for children under the age of six and is estimated to save parents $2,200 per child through the creation of 86,000 new licensed early learning and childcare spaces, noted a statement from Prime Minister Justin Trudeau’s office.
“By the end of the year, fees will be further lowered, and families will see a total reduction of 50% on average, saving them an average of about $6,000 per child per year. This agreement will deliver on average $10-a-day childcare for Ontario families by the end of March 2026,” the Prime Minister Office’s statement said.
Day care centres are indeed exorbitantly priced and, taxes included, can run as much as $2,100-2,700 a month per child, depending on the region of the province, and even then waiting lists are long and placements inconvenient for parents whose after-work routes home often involve detours to pick up their children -- certainly not ideal with today’s gas prices. If that weren’t costly enough, parents are charged several dollars for every minute they’re late.
But as lucrative as day care centres can be, the upfront construction costs needed to square individual units with regulatory requirements run between $300,000-500,000, which businesses, not landlords, pay. In addition to long wait times going through rezoning and getting approval permits from the city, along with the fact that government subsidies usually discriminate against for-profit providers in favour of not-for-profits -- all providers will be eligible to participate in the $10-a-day government subsidy program -- for-profit centres typically jump through hoops to participate in other subsidy programs, if their participation is even permitted at all.
Naila Saeed, CEO of Eyes Child Care, a private centre with multiple locations across Ontario, told STOREYS that the government is including for-profit day care centres in its subsidy program because it hasn’t a choice. “They cannot even entertain 40% of the demand, so they don’t have a choice but to include us”. However, she’s dubious the program will run smoothly considering how much red tape there is to begin with.
“In the last year in Peel Region, rezoning took us 10 months just to get the zoning -- forget about construction approvals and licensing. Then you have to get the architect, the mechanical engineer and all the rest. [Re-]Zoning has been slow. I hope the government does something about this to give us some kind of advantage. Sometimes it takes over a year,” Saeed said, adding that it can take nearly three years in the City of Toronto before retrofit construction can even begin.
“When the government promises so many things, they should have a system in place that allows us to get things faster. They need to do something to make it faster.”
Time is money, and in no place else is that truer than in construction, where delays completing projects, including from rezoning and site-plan permitting processes with municipal governments, results in higher expenses that are usually passed on to end users. Considering the excessive cost of securing care for just one child, a dysfunctional licensing system only exacerbates the enormous fees borne by parents, especially in Toronto, a city wherein affording everything from housing to taxes, and even the cost of goods, is a problem that can no longer be swept under the rug.
For day care centres that secure leases before going through the rezoning and site plan approvals processes, which come before construction can even begin, the clock is ticking. Saeed says magnanimous landlords who might not charge rent for, maybe, the first six months, are the exception, not the rule -- but even in such cases, the day care centre won’t be operational and earning revenue for at least two years.
“It is worse in the City of Toronto. We recently took over a day care centre after its owner, who operated it for the last 30 years, unfortunately passed away, but the city said they didn’t have any record of it, so we applied for a new licence,” Saeed said. “We are still waiting and it’s been eight months.”
Demand for Childcare Real Estate Is Through the Roof
Colliers’ data team has closely monitored the day care sector’s real estate habits and has ascertained that demand extremely robust, signifying that supply-side opportunities aren’t commensurate. According to Jamieson Jackson, Managing Director of the GTA Office Practice Group at Colliers, at least part of the reason for the imbalance is the multiplicative safety proofing requirements aren’t always easy to satisfy -- and, echoing Saeed, doing so is a time-consuming endeavour.
“Demand for additional real estate for day care centres is really high, but it’s constrained by a couple of factors: hyper-local zoning -- depending on where you are, it’s even more constrained -- and the other reason is day care facilities must all have outdoor areas, where, weather-permitting, children spend about two hours of the day,” he said. “Our day care clients have massive demand for more space, for more real estate.”
Although the COVID-19 pandemic was the impetus for the mass adoption of remote work, the last two years also demonstrated how difficult it is to concurrently watch over children and execute work tasks. But as COVID-19 becomes less deleterious and the pandemic subsides, companies are trying to entice their employees to return to the office by dangling on-premises childcare in lieu of the proverbial carrot.
For parents who work in Toronto, that’s good news, Jackson says, because they could conceivably drop their child off at a day care in the very building in which they work.
“Your ideal, as a parent, is to have a day care within walking distance of where you live, and a lot of the time that is not achievable. But if it can’t be close to where you live, maybe it could be close to where you work. This could be a significant shift in day care, because, as a parent, you don’t have much choice in terms of where you can place your child,” Jackson said, alluding to long waiting lists. “It’s about where you can possibly get a space, assuming you have a willingness to pay for it, but the question always becomes ‘’Where?’”
A father himself, Jackson added that a major reason proximity is imperative for parents is because children invariably feel sick or require succour only their parents can provide.
Increased demand catalyzed by the $10-a-day program notwithstanding, Canada’s population is surging and most newcomers choose to settle in the Greater Golden Horseshoe, which means that childcare demand will keep surging.
“Population growth will put more pressure on day care, for which there’s already an acute need, and more immigration means greater need for spaces,” Jackson said. “But the barrier to entry is finding available space, and opening up day care centres in office towers is a good way to create space, especially now that the government’s program will make day care more affordable.”
