C-PACE Financing Fills Void Left Behind by Banks

C-PACE financing is poised to gain even more relevance next year as banks continue to pull back on lending to commercial real estate, according to new data from CBRE. 

Loan volumes surged in the third quarter as spreads tightened and debt liquidity returned to high-quality assets. Most financing was provided by alternative lenders, and that trend is expected to continue despite the expectation that the Fed will further cut interest rates in 2025.  

Asset distress and increased regulatory pressures caused banks to make up just 18% of closings in Q3, down from 38% a year prior. Alternative lenders made up 34% of the non-agency loan closings, up 27% year over year. 

The reason for the increase is simple: Developers eager to get off the sidelines are exploring less traditional avenues to obtain much-needed financing. Commercial Property Assessed Clean Energy (C-PACE) is a popular option among property owners who need affordable, long-term financing to fill a gap between debt and equity.  

The next few months will present exciting opportunities for C-PACE to cement its foothold in the mainstream of CRE financing. Transaction activity is poised to accelerate, and the banking sector is not yet prepared to meet the rush in demand. 

For more information on how your project can leverage C-PACE financing to fund energy and water efficiency and to lower the overall weighted cost of capital, contact Lone Star PACE today.