Eight in ten nurseries in nine of the largest groups in the UK operate under leasehold arrangements, according to analysis from international real estate adviser Savills.

The research examines the portfolio tenure of the largest operators in 2019 and 2023, highlighting a shift towards leasehold structures. The findings reveal that most operators have expanded their number of settings during this period, with an increase in the proportion of sites held on a leasehold basis.

The Savills report suggests that leasehold structures are playing a crucial role in enabling rapid growth within the nursery sector. By unlocking access to capital that would otherwise be tied up in property assets, operators are better equipped to meet demand, expanding their portfolios without the need to secure the capital typically associated with purchasing freehold properties.

Jennifer Gill, director in Savills Leisure and Trading team, said: “As we look ahead, we’re seeing further shifts in holding structures that are driving consolidation, with more nursery groups embracing a predominantly leasehold model.  While a mixed model is generally favourable, many of the largest operators have already pursued sale and leaseback transactions for elements of their estates. We expect demand for these deals to continue in the coming years.”