Why California is a Hot Market for C-PACE Financing

Green initiatives and policies are increasing in the State of California, driving demand for Commercial Property Assessed Clean Energy or C-PACE financing for commercial buildings. While C-PACE demand is rising across the country, California commercial owners looking to update properties to comply with green regulations in particular can benefit from the program.

“Given the state’s policy focus with increasing requirements on property owners to reduce their carbon footprint, along with escalating costs to construct buildings due to skilled labor shortages and the inflation of raw material prices, Greenworks Lending fills a gap by financing up to 100% of these costs at very competitive terms,” Dana White, director of business development for California at Greenworks Lending, which recently expanded into the state as a result of the rising demand, tells GlobeSt.com

Compliance with new green regulations isn’t the only factor driving the increase. There are ample benefits to green building updates, and owners are more often looking to realize those returns. “As green initiatives continue their rise in California, commercial property owners and developers are increasingly recognizing the many financial and environmental benefits to clean energy,” says White. “These initiatives increase property values by boosting net operating income and help to attract and retain tenants in modernized buildings.”

Green buildings also produce higher returns, according to White, and helps to bring new projects to market on budget. “In addition, the projects that we finance are posting strong increases in return on equity as well as dramatic decreases to their overall weighted average cost of capital,” she says. “These are two critical metrics for anyone in the industry. This allows more projects to pencil out for completion. We find that our impact on the economy not only spurs development of much needed housing and commercial uses, but simultaneously increases job creation and energy savings.”

As part of its recent expansion into California, Greenworks Lending, and it expects a rapid expansion in the state. “As a balance sheet lender, we recently raised an additional $450 million of institutional capital and completed the first securitization of C-PACE financings in the country,” says White. “We expect to rapidly expand our pipeline in California, with a goal of financing $150 million in our first year of expanded operations.”