Once the domain of entrepreneurial developers, Commercial Property Assessed Clean Energy (C-PACE) financing is now commanding the attention of major institutions. Transaction sizes have multiplied in recent years, and the tool is being layered into billion-dollar deals.
“Three years ago, C-PACE was financing smaller, entrepreneurial projects,” says Jonathan Kloos, senior director of lender partnerships and new products at Nuveen Green Capital. "We're now providing financing packages that, between C-PACE and a mortgage, approach a billion dollars per transaction,"
One example: Nuveen recently closed a record-setting $290 million C-PACE financing for the Pendry Hotel & Residences in Tampa, FL. The deal finances a 38-story luxury condominium and hotel tower, with C-PACE brought in mid-construction to reduce overall project costs.
A flexible financing mechanism
Unlike conventional mortgages that are secured by liens on real property, C-PACE loans are secured through property tax assessments. Nearly forty states plus the District of Columbia now allow property owners to tap this private capital sources sustainability improvements and new construction projects.
C-PACE treats these sustainability upgrades as a public benefit—similar to infrastructure projects like sewers and roads—allowing repayment through assessments on property tax bills over 20 to 30 years. That structure enables developers to secure long-term financing at dramatically lower rates than mezzanine or preferred equity.
"When they’re putting together a capital stack, borrowers are looking to achieve the lowest blended cost of financing they can, and C-PACE is an integral component of that," Kloos says.
Filling the financing gap
C-PACE is not just a niche tool anymore. According to PACENation, the market reached a record $9.7 billion in 2024, up 33% from the prior year, while commercial real estate lending by US banks fell to an 11-year low, Federal Reserve data shows. Average transaction sizes have nearly doubled in just two years, going from $5.9 million in 2022 to $11.4 million last year.
Compared with other capital sources that can be several times more expensive, C-PACE allows developers to restructure more efficiently without creating collateral conflicts. "We show up to a situation with a big bucket of cheap capital," Kloos explains. "It's accretive to everybody in the stack."
C-PACE financing proves valuable across the project lifestyle. In new developments, it supplies patient, long-term capital at competitive rates. For projects facing delays or cost overruns, it can be layered in mid-construction. And in recapitalizations, it offers a low-cost alternative as higher interest rates and maturing loans pressure balance sheets.
Environmental catalyst
Beyond financial flexibility, C-PACE’s environmental focus has spurred efficiency upgrades across portfolios.
"With greater demand for our capital comes greater energy efficiency, carbon reduction, conservation of water and electricity, and seismic and hurricane resiliency," Kloos says. By offering attractive terms for improvements that were once cost-prohibitive, C-PACE nudges property owners toward sustainability they might have otherwise postponed.
As traditional lenders maintain tight credit standards and developers seek cost-effective capital solutions, C-PACE financing is playing an increasingly central role. It’s aligning capital markets with environmental goals while powering deals at an institutional scale.
For more insights and thought leadership from Nuveen Green Capital, click here.
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