Commercial Property Assessed Clean Energy (C-PACE) financing has evolved from an alternative funding source into a cornerstone of the institutional capital stack. Driven by market disruptions and growing investor appetite for the asset class, C-PACE origination volume has grown fivefold since 2020, according to C-PACE Alliance.
While the first C-PACE financing emerged in 2009, adoption accelerated as commercial real estate faced a series of shocks—from COVID-19 to rising interest rates in 2022 to tariff impacts and slowdown in new equity investment.
"Each time, C-PACE has been able to provide patient capital and help stabilize the commercial real estate market," says Alexandra Cooley, CEO and chief investment officer of Nuveen Green Capital. The resiliency of the investment performance has drawn particular interest from institutional investors.
From Sustainability Tool to Core Capital Source
C-PACE is a state-administered financing program that began as a way to fund clean-energy and efficiency upgrades, such as HVAC systems or rooftop solar. Operating in more than 30 states and the District of Columbia, it is a public-private partnership that leverages private capital for sustainability-related improvements and new construction.
Its scope has grown as well, according to Cooley. C-PACE has gone from single-asset retrofits to major construction and recapitalization projects, such as Nuveen’s record-breaking $290 million Pendry Hotel & Residences in Tampa. Today, it’s being layered into large developments and used to fill funding gaps with tighter bank lending and a sluggish CMBS market.
“CRE owners and sponsors are discovering how flexible this financing can be,” Cooley says. She notes that Nuveen Green Capital’s average transaction size is now nearly $25 million, more than double from just two years ago, offering solutions for a diverse range of capital needs.
Interest Coming from Institutional Investors
Institutional investor interest, particularly from insurance companies, has matched originations growth. Investors are drawn to the asset’s long-duration, investment-grade cash flows, backed by property assessments that have a strong security profile.
"As an investor, if you're willing to trade off a bit of liquidity, you can get a more attractive risk-adjusted yield," Cooley says. To date, Nuveen Green Capital is experiencing its most active fundraising period with nearly $1.5 billion in new commitments in 2025, reflecting how quickly C-PACE has become a mainstream financing tool for commercial real estate.
Structural Advantages
C-PACE occupies a unique position on the capital stack, Cooley explains. The assessment lien is attached to the property, not the borrower, and does not accelerate in foreclosure. It can be transferred with a sale, providing stability for long-term owners and flexibility for developers.
For construction projects, C-PACE can sit alongside senior debt or mezzanine financing to lower the overall blended cost of capital. Borrowers can also use it post-completion to recapitalize projects that need additional time or funding to stabilize, helping replace higher-cost bridge or mezzanine loans.
“From the borrowers’ perspective, it’s patient, predictable capital that can be layered in creatively,” Cooley says. “That makes it especially useful in a market where traditional credit is tight.”
For more insights and thought leadership from Nuveen Green Capital, click here.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.