After a year of record volume and large deals, C‑PACE has solidified its place as a mainstream solution within CRE financing. Originations soared in 2025 as borrowers leaned on it to revive stalled projects, blend down capital costs and navigate selective senior lending. With lender consent rising and equity still constrained, industry leaders expect C‑PACE to play an even larger role in 2026’s measured recovery.
That view was shared by insiders across the sector.
“In 2025, C-PACE definitively shifted from niche to mainstream,” said Rafi Golberstein, CEO and founder at PACE Loan Group. “Originations grew significantly, reaching a record $3.5B by most industry estimates as awareness expanded among owners, lenders and institutional investors. Deal sizes increased materially, with financing sizes frequently exceeding $100M.”
Chris Lawton, head of originations at Nuveen Green Capital (NGC), agrees.
“Property owners who might have previously viewed C-PACE as a supplementary financing layer began actively seeking it as a primary capital source,” Lawton said. “For NGC, 2025 was a landmark year. We closed both the first and second largest C-PACE transactions in the industry’s history: Post Brother’s The Geneva ($465M) and Two Road’s Pendry Hotel and Residences ($290M), as well as Naftali’s JEM Private Residences ($235M), demonstrating C-PACE’s scalability and viability for trophy assets and complex capital structures.”
Beneath the surge are falling pricing, cautious senior lenders, on-hold projects and sponsors searching for flexible capital.
“C-PACE had a record year because it helped lower the overall cost of capital and make deals pencil out in an otherwise challenging environment,” said Jared Schlosser, head of originations and C-PACE at Peachtree Group. “Many projects that originated in 2021 and 2022 stalled as rates rose, prompting heavy use of retroactive C-PACE to address capital stack gaps and revive transactions.”
Lee McCormick, president of Lone Star PACE, said that uncertainty was the defining factor for CRE in 2025.
“Uncertainty from trade wars and tariffs, which drove inflation and interest rate uncertainty, which affected the cost and availability of capital and led to many CRE projects being put on hold or terminated altogether,” he said. “C-PACE was able to fill the gap in capital stacks for a number of projects in Texas that wouldn’t have gotten across the finish line otherwise.”
Repricing and policy flexibility allowed sponsors to get creative with how they assemble capital stacks.
“C-PACE cost of capital has come down significantly in last 18 months,” said Anne Hill, SVP at Coral Gables, Fla.-based Bayview PACE. “Now pricing is at lower rates that most debt funds, so it is a good way to blend down the cost of capital if you can structure the C-PACE with a debt fund, such as some of our deals where we combine Bayview PACE funding with a Bayview construction loan.”
As acceptance rises, lender and borrower behavior is shifting.
“C-PACE will increasingly serve as a problem-solver and a primary capital source,” Schlosser said. “Retroactive C-PACE is addressing stressed deals, while higher allowable loan-to-cost thresholds in many states are enabling sponsors to use C-PACE alongside, or in some cases in place of, senior debt to keep projects moving forward.”
Golberstein adds, “Developers are using C-PACE in hybrid capital stacks, pairing it with senior debt and other alternative financing to optimize overall cost of capital. Adaptive reuse projects, particularly office conversions, continue to stand out as strong use cases where traditional lenders may be hesitant or overly punitive on pricing. We’re also seeing ‘stretch’ C-PACE emerge in certain markets, creating scenarios where C-PACE can fully replace the need for a mortgage loan altogether, significantly simplifying the cap stack.”
McCormick points to where C-PACE is making a difference regionally.
“In Texas, it can fund up to 35% of the capital stack on new construction or upgrade projects,” he said. “It is particularly beneficial when a gap in the capital stack is created by a senior lender’s desire to limit exposure on a project.”
With equity scarce and lenders selective, C‑PACE will continue to flourish in 2026.
“C-PACE will play a key role in enabling projects to move forward in 2026,” Lawton said. “We expect to see more adaptive reuse projects emerge, particularly in cities where aging building stock and sustainability priorities create both opportunity and necessity — with C-PACE acting as a go-to financing tool.”
Kevin McMeen, president and CEO of Petros PACE Finance, agrees.
“C-PACE will continue to play an important role in funding new construction or renovation projects with meaningful clean energy and resiliency improvements,” he said. “By providing a strong foundation for a capital stack, C-PACE will help sponsors put together transactions that efficiently employ capital up and down the risk spectrum.”
McMeen expects the maturation of C-PACE to continue in 2026 as borrower adoption increases and more first mortgage lenders consent to transactions with C-PACE.
“C-PACE transactions will continue to increase in size. This will further support C-PACE’s move into the institutional real estate space as the cost of capital becomes more compelling and sponsors press more first mortgage lenders to adapt to capital stacks with C-PACE.”
Golberstein notes that C-PACE helped fill gaps left by traditional lenders in 2025 and continues to expand geographically into new states and jurisdictions, but he is cautiously optimistic as debt markets begin to open back up.
“Banks, insurance companies and private credit lenders are increasing originations, credit spreads have tightened and capital is returning to the sector,” he said. “Overall, 2026 looks like a measured recovery. There is more capital available and greater pricing clarity, but underwriting discipline and structural caution remain. The market will continue to reward high-quality assets, conservative underwriting and thoughtful, creative capital structures.”
He adds, “C-PACE continues to move toward broader institutional acceptance. Larger deal sizes and increased participation from insurance capital and other long-duration investors are reinforcing its credibility.”