---
title: 4.3 – What to Look at Before You Sign a Lease for a Childcare Space
description: "**By [Dinesh Sharma](https://operatorjourney.ca/contributors#ANCHOR_DINESH), Principal Architect OAA, Sharma Office of Design + Architecture Inc. (SODA)** *You found a space you love. The location is right, the price works, and your realtor says it's a great deal. But before you sign anything…"
url: "https://operatorjourney.ca/docs/what-to-look-at-before-you-sign-a-lease-for-a-childcare-space/"
updated: "2026-10-10"
category: "Childcare Centre / Module 4 - Building from Scratch"
---

# 4.3 – What to Look at Before You Sign a Lease for a Childcare Space

**By [Dinesh Sharma](https://operatorjourney.ca/contributors#ANCHOR_DINESH), Principal Architect OAA, Sharma Office of Design + Architecture Inc. (SODA)**

*You found a space you love. The location is right, the price works, and your realtor says it's a great deal. But before you sign anything — here's what an architect looks at first.*

Running a childcare centre is a people business. But before you can open the doors to your first family, you have to deal with the building itself. And the building will either make your life easy or cost you a lot of money, depending on what you know before you commit.

Most people buying into a childcare franchise or starting their own centre hire an architect after they've already signed a lease. By then, it's too late to walk away from a bad space — you're stuck fixing problems you didn't know you were buying.

This article walks you through what to look at before you make an offer, in plain language, so you can ask the right questions at the right time.

**The most important thing to understand upfront**

Not every commercial space can become a licensed childcare centre without significant work. Some spaces are easy to convert. Others look great on the surface but require expensive changes — or carry environmental and regulatory requirements that can delay your project by months or make it impossible altogether.

The difference between a smooth project and a difficult one often comes down to what you discover before you sign — not after.

**1. Does the space have an outdoor play area — on site?**

This is the first thing to check, and it's non-negotiable.

Under Ontario's Child Care and Early Years Act (CCEYA), every licensed childcare centre must have a designated outdoor play area. That play area has to be on the property itself — not a park down the street, not a shared green space in the neighbourhood. On the property, and accessible directly from inside the building.

**What to look at:** Does the building have a yard, a fenced outdoor area, or a rooftop terrace that could work? Is it accessible from the childcare rooms without children having to walk through a public parking lot or shared corridor? If the space has no outdoor area and no realistic way to create one, it cannot be licensed as a childcare centre. Full stop.

This one check alone can eliminate a lot of otherwise attractive spaces from your list.

**2. Is the space actually permitted for childcare — and do you need a Record of Site Condition?**

Every commercial space has an occupancy classification — essentially, what it's legally allowed to be used for. When you move a childcare centre into a space that was previously used for something else, that's called a **change of use**, and requires a building permit.

But there's something even more significant that came into effect in Ontario as of October 2025, and it catches a lot of operators off guard:

**When you convert a space to a childcare centre, you may be required to file a Record of Site Condition (RSC) with the Ontario Ministry of the Environment, Conservation and Parks (MECP).**

Here's why this matters. Childcare centres are classified as a **sensitive use** under provincial environmental law — meaning they house vulnerable people (children) who will spend significant time in that space. When a property changes from a non-sensitive use (like retail or office) to a sensitive use like a daycare, the province wants to confirm that the land and building are environmentally safe.

An RSC is essentially the official documentation of that environmental clearance. It gets registered on the property's title — meaning it becomes part of the landlord's permanent ownership record.

**This is where it gets complicated for tenants:**

Not every landlord is comfortable having something registered on their title. Some will refuse outright. And if a landlord refuses to allow an RSC to be filed, a childcare centre cannot legally operate in that space — regardless of how perfect the location seems.

**Before you fall in love with a space, ask the landlord directly:** Are you aware that a childcare use may require a Record of Site Condition to be registered on title? Are you open to that?

That conversation needs to happen early. If the answer is no, move on.

**3. What does getting a Record of Site Condition actually involve?**

The RSC process typically involves one or both of the following:

**ESA Phase 1 — Environmental Site Assessment** This is a desktop review. A qualified environmental consultant researches the history of the property — what was there before, what neighbouring properties have been used for, whether there's any known contamination in the area. It involves a site visit but no digging or sampling. Cost varies, but expect roughly $2,000 to $5,000 for a typical commercial property.

**ESA Phase 2 — If Phase 1 raises concerns** If the Phase 1 review identifies potential contamination issues — for example, if the building previously housed a dry cleaner, a gas station, or an industrial operation — a Phase 2 assessment may be required. This involves physical testing of soil and potentially groundwater. It costs more and takes longer. Not every project triggers a Phase 2, but it's important to know it's a possibility.

**Is there an exemption?** In some cases, a Record of Site Condition is not required — for example, if the childcare centre is located on the second floor or higher of a building that is at least six storeys tall, and the exterior of the building is not being changed, and the space has no history of contaminating uses. However, these exemptions are not automatic. They require coordination between the architect, the MECP, and the local municipality. There is still a process to go through, still documentation to prepare, and still a determination to be made by the authorities. The exemption exists, but it should not be assumed. Get professional advice specific to your situation before counting on it.

**4. Are there other environmental or planning studies required?**

Depending on where your space is located, additional studies may be required before a permit is issued. These are not universal — but they come up often enough that you should be aware of them.

**Land Use Compatibility Study** If your prospective space is near industrial properties, major roads, or other uses that generate noise, odour, or other impacts, the municipality may require a land use compatibility study. This is undertaken by a professional planner and assesses whether the proposed childcare use is appropriate given the surrounding environment. The focus is on whether the location is genuinely safe and suitable for children.

**Metrolinx Review** If your space is located near a Metrolinx corridor — a GO rail line, LRT route, or similar transit infrastructure — Metrolinx may need to review and approve the project. This is a separate process from the municipal permit and adds time to your timeline. If you're looking at a space anywhere near a rail or rapid transit corridor in the GTHA, flag this early.

**Traffic Study** In high-traffic areas, or where the childcare centre will generate significant vehicle movement (drop-off and pick-up), the municipality may require a traffic study. The goal is to ensure that children can be safely dropped off and picked up without creating dangerous conditions at the entrance.

None of these are automatic requirements for every project — but each one adds time and cost when they do apply. An architect familiar with childcare projects in Ontario will be able to tell you quickly which of these are likely to apply to a specific site.

**5. Are there enough washrooms — and are they in the right place?**

Childcare centres in Ontario are governed by two sets of rules: the Ontario Building Code and the Child Care and Early Years Act. Both have washroom requirements, and they don't always match.

In general, you need child-sized washrooms, and you need enough of them relative to how many children you're licensed for. They also need to be accessible from the childcare rooms directly — not through a public corridor.

**What to look at:** How many washrooms are in the space, where are they, and are they positioned to work for small children? Adding or relocating washrooms is one of the most expensive things you can do in a renovation because it involves moving plumbing. If the existing plumbing isn't close to where you need it, the cost goes up significantly.

**6. Can enough people safely exit the building?**

Every occupied space needs a minimum number of exits, wide enough and positioned correctly to allow safe evacuation. For a childcare centre — where you're responsible for evacuating children who can't move quickly on their own — this is taken seriously.

**What to look at:** How many doors lead outside? Are they wide enough? Is there a second exit available if the main one is blocked? In most commercial spaces this isn't a problem, but in basement spaces, upper floors without elevators, or older buildings, it can be.

**7. What condition is the HVAC system in?**

HVAC — the heating, ventilation, and air conditioning system — controls air quality and temperature in the building. For a childcare centre, the Ontario Building Code requires a minimum amount of fresh air per child. If the existing system can't deliver that, it needs to be upgraded or replaced. A full HVAC replacement in a commercial space can cost $30,000 to $80,000 or more.

**What to ask:** When was the system last replaced or serviced? Is it sized for this square footage? If the answers are vague, flag it for investigation before signing.

**8. Is the space actually the right size?**

Square footage listings are not always what they seem. A space advertised at 3,000 square feet might have columns, mechanical rooms, or awkward layouts that reduce your usable area significantly.

Under the Child Care and Early Years Act, you need a minimum of **2.8 square metres of usable indoor play space per child** — and that doesn't include hallways, washrooms, storage, or staff areas. Only the rooms where children spend time.

**What to check:** Ask for a floor plan and run the math based on how many children you plan to care for. Make sure the numbers work before going further.

**9. What is the landlord willing to put in writing?**

Before signing a lease, confirm the following:

- Is the landlord aware that a childcare use may require a Record of Site Condition on title — and are they willing to allow it?
- Will the landlord contribute to renovation costs (a **tenant improvement allowance**)? This is standard in commercial leasing and worth negotiating.
- Does the lease give you enough time to complete the renovation and permit process before rent begins?
- Are you permitted to make the physical changes the space requires?

A landlord who is flexible and transparent on these points is a good sign. A landlord who hesitates on the RSC question needs to be pressed for a clear answer before you invest any more time in the space.

**The bottom line**

A beautiful space in the right neighbourhood can still be the wrong choice if the building creates regulatory, environmental, or physical obstacles you weren't prepared for. The questions in this article won't answer everything — but they'll tell you whether a space is worth investigating further or whether you should keep looking.

If you've found a space you're serious about and want a professional set of eyes on it before you commit, that's exactly the kind of conversation we have at SODA.

**Reach out at [sodainc.ca](https://sodainc.ca/) — we’re happy to talk through what you’re looking at.**