New research from Savills has found that for every 855 new homes built, one new average-sized day nursery offering a minimum of 54 places is required.

And, with the Government targeting delivery of 1.5 million new homes over the next five years, this implies a need for approximately 1,754 new day nursery settings across England.

And Savills claims even more spaces could be required if the Government wants to meet its pledge of providing 100,000 new early years places.

A total of 3,694 new day nurseries were registered with Ofsted in the five years from January 2019 to January 2024, and 15% of these were located within half a mile of residential developments of over 50 houses.

Looking ahead, Leeds, North Northamptonshire, and London’s Tower Hamlets and Wandsworth have the highest number of existing planning applications for large new residential sites, according to Savills, and are therefore likely to be in need of additional nursery places.

Jennifer Gill, director of Savills’s leisure and trading team, said: “While the UK day nursery market remains largely fragmented with the majority of settings operated as independents, the sector is rapidly evolving and we’re seeing continued consolidation of the market by corporate groups.

“This type of nursery operator tends to embrace leasehold tenure structures as it allows them grow at speed opposed to investing in buying property assets.

Local authority boundaries with count applications and potential development sites over 85 (below)

“This model lends itself to pre-letting non-domestic space in large new housing developments for use as day nurseries, so we expect this trend to increase as we seek to deliver the number of places needed to fulfil the demand from more residential development.”

Happy Days and Kido are two examples of new nurseries which have been established within the last two years within new housing developments.

Happy Days Bristol is a 90-place purpose-built nursery and pre-school, located on a site opposite Charlton Wood Primary School and within the heart of Charlton Hayes, a 2,400-unit residential housing scheme.

Kido London, established in January 2023 is a 65-place, 5,990sq ft day nursery located within the Prince of Wales Drive residential development made up of 926 flats in Battersea.