Leasing Commercial Space to a Licensed Child Care Centre: Ontario’s CCEYA Space and Outdoor Play Requirements
Daycare operators are signing long leases across the GTA — but under Ontario’s child care rules, the licence is earned partly by your building. Indoor square metres, a fenced play space at grade, a second-storey ceiling: here is the landlord’s due-diligence map before you sign.
What space requirements does an Ontario daycare have to meet before it can operate in my commercial unit?
Under Ontario Regulation 137/15 (made under the Child Care and Early Years Act, 2014), a licensed child care centre needs at least 2.8 square metres of unobstructed floor space per child for infant, toddler, preschool and family age groups (2.58 for kindergarten and school-age groups), and — if the program runs six hours or more a day — a fenced outdoor play space of at least 5.6 square metres per child, at ground level and adjacent to the premises. Every figure is measured against licensed capacity, and the plans must be approved by a Ministry director before any renovation begins. Your building carries half the licence.
Source: Ontario e-Laws, O. Reg. 137/15, ss. 16 and 24, under the Child Care and Early Years Act, 2014 (accessed July 2026)
I am Arthur Zhao. A leasing call I get more and more often from plaza owners goes like this: “A daycare wants my end-cap unit — long lease, good covenant. Anything I should worry about?” The honest answer: the tenant is usually excellent; the regulation is where the work is. Ontario licenses child care centres under the Child Care and Early Years Act, 2014, and the licensing rules in O. Reg. 137/15 are written as much about the real estate as about the operator — floor areas, storey limits, fencing, even room temperature.
Before you sign, your property has to pass three tests. Here they are, in the order a licensing review will hit them.
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ℹ️This article is general information, not legal advice. O. Reg. 137/15 leaves many premises decisions to a director’s case-by-case discretion. Verify the current regulation and retain a child care licensing consultant and a real estate lawyer for any actual transaction.
Why daycares are knocking on commercial doors
The demand story is policy-driven. According to the City of Toronto, parent fees for children under six at centres enrolled in the Canada-wide early learning and child care system (CWELCC) have been capped at $22 per day since January 2025. Lower fees mean longer waitlists, and operators are hunting for space they can license — retail units, former bank branches, plaza end-caps.
For a landlord, the appeal is structural. A daycare tenant sinks heavy capital into fit-out, builds enrolment on a walk-and-drive radius, and cannot relocate without licensing the new premises from scratch. That is about as sticky as a commercial tenant gets. The trade-off: whether this tenant can open at all depends substantially on the physical property — which makes you a party to the licensing story whether you planned to be or not.
Three tests your property has to pass
The licence is issued by a director at the Ministry of Education, and section 13 of O. Reg. 137/15 requires the applicant to file evidence about the premises before a licence is issued — and again at renewal if the director asks. Everything below flows from that one design choice: a large part of the licensing file is about your building, not the operator.
The paper test: zoning, Building Code, Fire Code
Two landlord takeaways. First, zoning kills more daycare deals than anything else — confirm that a child care centre is a permitted use on your site before anyone drafts an LOI, and find out early whether a minor variance would be needed. Second, converting retail space to child care will usually engage a change of use under the Building Code: building permits, fire separations, washroom counts, accessibility. That construction happens inside your asset, so the lease has to say who builds and who pays.
The indoor math: 2.8 square metres that are not what they sound like
- Unobstructed means built-in counters, sinks, shelving and cubbies come out of the count.
- Each group needs its own room (s. 17) — and infants also need a sleeping area separated from the play space. One open floor plate does not license well.
- Support space is extra (s. 15): washrooms, food preparation, storage for records, medication and hazardous materials, a staff rest area, an office — all required, none of it counts as play space.
The building itself is regulated too: rooms used by the children must be on or below the second storey unless a director approves otherwise (s. 20), artificial lighting in each playroom must reach at least 55 dekalux (s. 22), the temperature must be kept at 20 degrees Celsius or above (s. 23), and window glass must meet Building Code requirements (s. 21).
The land test: 5.6 square metres of outdoor play space per child
- Location: at ground level and adjacent to the premises — rooftop or off-site alternatives are the exception and need director approval;
- Fencing: at least 1.2 metres (4 feet) high with securely closed gates wherever infant, toddler, preschool or family age groups use the space;
- Sections: where licensed capacity exceeds 64, the space may be divided by fencing so all children can be outside at once, with no fenced section holding more than 64 children at a time;
- Structures: any fixed play structure or surfacing built or renovated on or after August 29, 2016 must meet the CSA children’s play spaces standard (CAN/CSA-Z614-14, as amended).
And the space is used daily — section 47 requires children in care for six hours or more to spend at least two hours outdoors each day, weather permitting.
On a typical plaza, that land comes out of the parking field or a landscaped strip. It permanently changes how that part of the site can be used, and it raises parking-ratio and site-plan questions that the Ministry approval process does not answer for you.
🚨Carving the outdoor play space out of your parking field can trigger parking-ratio shortfalls and site plan amendment requirements at the municipal level. Ministry approval of the child care plans does not resolve municipal planning issues — check with the municipality before you sign, not after.
💡 A worked illustration (my arithmetic on the regulatory ratios, not a real project): a single-preschool-group centre licensed for 24 children needs 24 × 2.8 ≈ 67 square metres (about 720 square feet) of unobstructed play space — before washrooms, kitchen, storage and office — plus 24 × 5.6 ≈ 134 square metres (about 1,450 square feet) of fenced outdoor space at grade. Scale up to a 49-child, three-group centre and the outdoor requirement alone approaches 3,000 square feet of your site. Run this math before pricing the deal, not after.
Plans approved before the first wall moves (s. 14)
Section 14 requires that where a building is to be erected, used, altered or renovated as a child care centre, the work must not begin until the plans are approved by a director — and the plans must show every designated space listed in section 15. In sequence, that means: architectural drawings → director approval → municipal permits and construction → health and fire sign-offs → licence.
For the lease, this is a timeline clause in disguise. A daycare fit-out period is longer than retail, and the critical path runs through a government approval neither party controls. Rent commencement should be tied to milestones, not to a calendar guess made at signing.
⚠️The section 14 sequence is mandatory: no alteration or renovation may begin before a director approves the plans. If the lease sets a retail-style fixed rent commencement date, an approval delay becomes the landlord’s problem. Tie commencement to milestones instead.
Drafting the lease: where the regulation lands on paper
Five clauses carry most of the weight:
- Licensing condition. Make the deal conditional on director plan approval and licence issuance, with a hard outside date and exit rights both ways.
- Outdoor space on a plan. Attach a site plan marking the fenced area; spell out exclusive use, fence and gate ownership, maintenance, snow clearing and the operator’s inspection duties — the regulation requires daily, monthly and annual playground inspections and a repair log.
- Work and cost allocation. Change-of-use permits, fire upgrades, washrooms, fencing: who applies, who pays, and what happens to these highly specialized improvements at surrender.
- Term and rent commencement. Heavy tenant investment plus a serial approval path argue for a longer term and milestone-based commencement.
- Insurance and CAM. Reset liability limits and additional-insured status for a child care use, and adjust CAM allocation if common area became the playground.
💡 Bottom line: a daycare can be one of the best covenants on your rent roll, but the licence is underwritten by your real estate. Sequence the due diligence — zoning first, indoor math second, outdoor land third — then write the approvals into the lease as conditions and milestones. The landlords who get burned are not the ones who negotiated hard; they are the ones who renovated first and asked the regulation later.
Frequently Asked Questions
Can a daycare operate on the second floor of a commercial building in Ontario?
Yes. Under s. 20 of O. Reg. 137/15, the rooms used by the children must be on or below the second storey; anything higher needs director approval. Expect the change-of-use review to focus on exits and accessibility — that is where upper-floor units usually struggle.
How much outdoor space does a licensed daycare need in Ontario?
For programs running six hours or more a day: at least 5.6 square metres (about 60 square feet) per child of licensed capacity, at ground level, adjacent to the premises and fenced to at least 1.2 metres, unless a director approves an alternative (O. Reg. 137/15, s. 24). A 50-child centre needs roughly 280 square metres — about 3,000 square feet of land.
Can the daycare use a nearby park instead of building its own playground?
Not by default. The regulation’s baseline is an outdoor play space at ground level and adjacent to the premises; any off-site or rooftop alternative is an exception that requires director approval, decided case by case. Before the lease is signed, ask the tenant for their written outdoor-space plan — including exactly where on your site the land comes from.
How many children can a 2,000 square foot commercial unit hold?
There is no shortcut division. The 2.8 square metres (about 30 square feet) per child applies only to unobstructed play space — hallways, washrooms, kitchen, storage and office areas do not count, and every age group needs its own room. Two units of identical size can support very different licensed capacities. The real number comes from an architect’s drawings against the regulation, and ultimately from the licence itself.
Who pays for the fence, washrooms and renovations — landlord or tenant?
The regulation does not care; it only requires the result. Allocation is pure lease negotiation: typically the tenant funds the specialized fit-out, and landlords contribute where improvements add durable value to the building. What matters is writing it down — permits, construction costs, restoration at end of term — before work starts, because s. 14 requires director-approved plans before any renovation begins.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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