C-PACE Financing Surges as Real Estate Seeks Resilience and Efficiency

A specialized type of loan, known as Commercial Property Assessed Clean Energy (C-PACE) financing, is experiencing significant growth in a challenging lending environment. This financing mechanism helps commercial property owners fund energy efficiency upgrades, renewable energy installations, and resilience improvements.

Record-Breaking Deals and Growing Adoption

In February 2026, Nuveen closed a $465 million C-PACE deal for The Geneva, a large-scale office-to-residential conversion project in Washington, D.C. This transaction marks the largest C-PACE financing deal in history. C-PACE differs from traditional bank loans by operating at the state level, requiring enabling legislation from local leaders. The loan amount is added to the property’s tax bill and repaid over an extended period, often 20 to 30 years, with fixed rates.

Between 2009 and the end of 2024, cumulative C-PACE investment reached nearly $10 billion, according to PACENation, a nonprofit advocacy group. Growth has accelerated in the last five years, with C-PACE lending experiencing double-digit gains as more states enact policies and owners and lenders embrace the tool.

Currently, 40 states have C-PACE policies, with 32 active programs, a substantial increase from the six active programs in 2015. Nuveen closed $2.1 billion in C-PACE loans across 53 deals in 2025 alone, and has originated over $5 billion in total. In September 2025, Nuveen finalized a $290 million C-PACE transaction for the Pendry Hotel & Residences in Tampa, Florida, marking the first C-PACE-financed project in the city.

Beyond Environmental Benefits

Nuveen reports that its C-PACE lending has facilitated projects that have saved over 300,000 metric tons of carbon dioxide. However, lenders emphasize that the benefits extend beyond environmental concerns, particularly as political priorities shift.

“The underlying require of making properties more resilient, more efficient to operate, really doesn’t move away,” said Alexandra Cooley, CEO and CIO of Nuveen Green Capital, an affiliate of Nuveen. “Actually, the vast majority of the projects that we see — the last I checked it was 97% — are some combination of either energy efficiency, which is cutting costs of operating the property, or climate resiliency. So a very small percentage is actually renewable energy.”

Attractive in a High-Interest Rate Environment

C-PACE is gaining traction as an increasingly attractive option for lenders in a higher-for-longer interest rate environment and amid uncertainty in the commercial real estate (CRE) market. The loans are secured by a senior tax assessment on the property itself, offering a level of security appealing to long-term investors.

“Our borrower is really the property itself, not necessarily the owner of that property at any given moment. So, it’s safer, and it enables our investors, who are long-term investors, to have that duration,” Cooley explained.

Rescue Capital and Economic Development

Peachtree Group recently closed a $176.5 million C-PACE loan for the Rio Hotel & Casino in Las Vegas, Nevada, financing renovations completed in 2024. This loan was structured retroactively, allowing the owners to reduce their existing senior loan obligations.

“They can be utilized as a rescue capital mechanism, where you just recently opened a fresh development project…and you could technically do a retroactive C-PACE loan to help recapitalize that project and help pay down the bank or the lender that financed the project,” explained Greg Friedman, CEO of Peachtree Group.

Friedman views C-PACE as an economic development tool, particularly as traditional capital markets for commercial real estate remain constrained. “Banks make up 50% of the commercial real estate lending market. Banks tend to be the lender of choice for new construction…and they’re just not lending at the same level,” he said. Peachtree finds C-PACE profitable, as the company can aggregate and securitize the loans, attracting investment from insurance companies.

Resilience Against Climate Risks

While the “green” aspects of C-PACE are important, lenders are increasingly focused on the “resilience” benefits. C-PACE loans can fund upgrades to protect buildings against floods, fires, and earthquakes, appealing to investors as climate-related disasters become more frequent and severe.

Future Growth Drivers

Cooley identifies three key drivers for continued expansion in the C-PACE market: more states adopting C-PACE programs, increased market education and awareness, and growing investor interest. “As institutional investors have come in, the cost of capital and the structure of C-PACE has become a lot more compelling for the commercial real estate industry,” she said.