The Mandate
A licensed early-childhood educator developing a ground-up center engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 504 financing request for a project located in Middlesex County, Massachusetts. Total project capitalization fell within the $3M-$5M band. The capital provider, a SBA Certified Development Company partnered with a regional bank, required documentation consistent with current program review standards. The analytical question put to the team: Did Lexington-Bedford working-parent household density and competitor waitlists support 120-capacity enrollment within 12 months.
Engagement Scope
- Primary market area defined as a 5-mile drive-time
- Comparable supply set of 10 properties
- Demand model framework: working-parent household capture and licensed-capacity utilization model
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 5-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of childcare assets in Massachusetts. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 10 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a working-parent household capture and licensed-capacity utilization model approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 2.6 across the projection window, with a stabilized capture rate of 4.1%.
Exhibit 1: Comparable Supply Set, Massachusetts PMA
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Exhibit 2: Demand Projection Summary, 10 years Horizon
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Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- PMA dual-income households with children under five totaled 5,120, exceeding licensed capacity by 2.6x.
- Comparable centers operated at 96% to 100% enrollment with average waitlists of 11 months.
- Subject reached 94% enrollment in month 11 of the projected absorption schedule.
- Stabilized 504 DSCR of 1.42x cleared the program review threshold.
Deliverable
The delivered report ran 114 pages with 26 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the SBA Certified Development Company partnered with a regional bank. The corresponding SBA 504 review framework guided exhibit selection and supporting documentation.