Day nursery market insight: Yorkshire & North East

Vicky Marsland, associate director – Childcare & Education at Christie & Co, shares her insight into the day nursery market in Yorkshire and the North East

So far this year, the day nursery market in Yorkshire and the North East has remained high-paced and competitive, and we don’t expect that to slow down.

Who’s buying?

Corporate operators continue to seek out well-established, highly profitable settings with strong management in place, and we’re also seeing new investors entering the early years market with the aim of creating regional groups through targeted acquisitions. While it’s positive that these newer entrants understand the desirability of the sector, many are trying to perform transactions through deferred payment structures. We have also seen an increase in buyers making direct approaches to owners. If you’re looking to sell, be mindful that the best price is associated with competitive tension created between buyers to get the best price. In what can be a complex deal, having a broker to advise will ensure you navigate through your sales process and end up with the best possible outcome.

The level of new first-time buyers wanting to enter the market in the North is consistent with last year. Though, due to increased economic uncertainty, the cost-of-living crisis, and increased expenditures, they typically have lower budgets for their first day nursery purchase.

What are they buying?

Across Yorkshire and the North East, we’re seeing a range of new opportunities coming to market; it’s an interesting combination of single assets registered from circa 40 children up to group opportunities with capacities for over 400 children. Many are retirement sales, and there is a fairly even split between freehold and leasehold settings for sale in the region, as owners are increasingly recognising the benefits of keeping their properties, creating a new lease, and securing themselves a regular annual income as a result.

There’s also a strong level of buyer appetite for settings that offer an experienced manager and team in situ.

Where are they buying?

We’ve recently seen an influx of nursery opportunities come to the market in the North East; North Yorkshire, and County Durham areas, traditionally these had been seen as ‘quieter’ areas for market activity, likely due to a lower number of settings and a higher level of more rural towns and villages.

Demand still remains strong for the golden triangle – Leeds, York, and Harrogate.

With the buyer demand outweighing the current supply of opportunities for sale, many buyers are now widening their search areas and are keen to explore the most opportunities available.

Case study

The key to any nursery purchase is funding. At Christie & Co we have the unique benefit of working closely with Christie Finance, which means we’re able to better vet our registered buyers and facilitate deals more swiftly.

A great example of how this works well was with the recent sale of Pearls Poppets, a leasehold setting just over 30 minutes from York. A profitable nursery with a capacity for circa 41 children, registered ‘Good’ with Ofsted, this presented a perfect opportunity for a first-time buyer.

The purchaser was known to Christie & Co – as a colleague in our retail team had previously facilitated the sale of their business – and he was keen to explore the funding options available. With the help of Alena Ray at Christie Finance, who secured funding for the purchase, we were able to achieve a sale.

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