Commercial Leases: Increasing Operating Costs

After employees' wages, real estate costs tend to be the second largest operational cost for all early childhood education and care services.

Hence, with virtually universal concerns about rising interest rates, commercial leases have also become a growing concern, especially when it is also a cost-contributor ultimately to fees to parents and families.

A significant challenge for leasehold-based services can be when renegotiating a lease for potentially up to even 5+5 years. Hence, predicting future interest rates even in the near term can tip the balance of the service's operational viability.

As recently reported by the Daily Telegraph, albeit rare, it is possible for early childhood education and care services to shutdown due to their inability to secure sustainable commercial leases.

Should members have concerns about their commercial leases, ACA NSW may be able to assist. Please contact the ACA NSW team via 1300 556 330 or nsw@childcarealliance.org.au.

PUBLISHED: 2 MAY 2024