Being a commercial real estate owner today means dealing with a tougher lending landscape that’s made even more complex with rising insurance costs.
On top of that, you have to work with tenants who expect transparency on how you maintain and manage the building.
In this environment, it’s important to make sustainability upgrades a part of your new valuation strategy.
If your building wastes energy or isn’t performing well, buyers and lenders will assume it needs expensive repairs in the future.
That lowers what they’re willing to pay or lend — a pricing adjustment widely known as the “brown discount.”
By improving efficiency now, you protect your NOI and keep more exit or refinancing options open.
If you don’t want to use your own cash to pay for upgrades, C-PACE is a financing tool designed to help property owners fund energy, water, and resilience improvements.
It works differently from a bank loan: repayment is added to the property tax bill and stretched over 20–30 years at a fixed rate.
Because upgrades cut operating costs, those savings help offset the repayment, making the financing easier to manage even in a high-rate environment.
Why C-PACE is gaining ground in a tight lending cycle?
To understand how C-PACE can help, it’s worth looking at some of the largest C-PACE transactions ever recorded in the past few years.
Nuveen is a good example — they’ve used C-PACE to finance very large projects, including the biggest one ever done: $465 million for a Washington, D.C. office-to-residential conversion.
They’ve also completed other large transactions and originated over $2.1 billion in 2025, showing how active major investors have become.
By the end of 2024, total C-PACE financing nationwide was close to $10 billion.
Adoption is spreading quickly because more states are creating programs.
Back in 2015 only six states offered C-PACE; now thirty-two have active programs and forty have passed laws that allow them.
Big lenders like C-PACE because the repayment is collected through the property tax bill, not through a conventional loan.
That tax assessment has priority over most other claims, so lenders view it as safer and more secure.
For investors who plan to hold properties for many years, this structure gives them steady, predictable repayment — something that’s harder to find now that banks have scaled back construction and renovation lending.
For owners, C-PACE lets you lock in fixed payments over a long period while immediately lowering your building’s operating costs through efficiency or resilience upgrades.
Because these improvements cut waste, you can see clear savings that help justify the project.
And since C-PACE is available in many states, you can usually find a program that fits your needs.
Performance upgrades that protect value in tougher markets
Nuveen’s data shows that almost all the C-PACE projects they finance (97%) aren’t flashy solar or brand-driven “green” upgrades.
They’re practical fixes that directly improve building performance — things like HVAC replacements, flood-proofing, or seismic upgrades.
These upgrades matter because they change how a lender underwrites your deal: better efficiency and stronger resilience lower perceived risk, and can improve financing terms.
If your building uses less energy and is built to handle heat, storms, or other extremes, it’s more dependable and cheaper to run.
That makes future capital expenses less likely, which supports higher rents and helps protect your valuation.
Efficient buildings also avoid the appraisal discounts and buyer skepticism that “brown” or under-maintained assets are now facing.
The same idea applies to the building’s appearance and basic systems.
Upgrading windows, facades, lighting, elevators, or ventilation doesn’t just cut energy use — it makes the property more attractive to tenants.
A more appealing and efficient building stays fuller, which stabilizes your NOI even when the market is uneven.
How owners use C-PACE as a capital solution
C-PACE isn’t just for future upgrades.
You can use it after you’ve already renovated a building (typically within the past three years) to reimburse yourself.
That frees up cash you already spent and lets you pay down other debt or stabilize an asset that’s under pressure.
Peachtree used this strategy at the Rio Hotel & Casino in Las Vegas. They had already completed renovations, then brought in $176.5M of C-PACE to restructure the financing afterward.
In other words, they used C-PACE as a retroactive capital fix, not a project-launch tool.
With banks pulling back on construction and repositioning loans, C-PACE becomes a rescue capital option.
Owners can still secure it after the work is done — for hotels, multifamily, and redevelopments — and use it to strengthen their balance sheet.
Lenders like the structure because C-PACE loans can be pooled and turned into securities that insurers and big institutions will buy.
Those investors want long-term, predictable repayment streams tied to a senior tax assessment — exactly what C-PACE provides.
The tactical playbook for raising NOI through “green” tech upgrades
Even in a challenging market, C-PACE can help you fund green tech upgrades to raise your NOI.
To be effective, you must target permanent improvements that cut waste and reduce exposure, or increase tenant appeal.
High-efficiency HVAC systems
If you own a large office or hotel, or even a mixed-use asset, upgrading to modern heat pumps and smart controls allows you to swing utility costs materially.
Building envelope improvements
Insulation upgrades and energy-efficient windows can help you stabilize indoor temperatures and reduce load on mechanical systems.
Appraisers also recognize the long-term impact of these improvements in reducing your deferred maintenance risk.
Water efficiency retrofits
If you upgrade your building to use less water — especially in hotels or mixed-use properties that consume a lot — you cut your operating costs right away.
And because cities are raising water rates and drought rules are becoming stricter, using less water also protects you from future price increases or usage limits.
Resilience upgrades
With flood barriers and seismic retrofits, you can protect your property and reduce insurance pressure.
These investments allow you to directly address lender concerns and reduce the brown discount tied to escalating climate risk.
Curb appeal improvements
You can justify higher rents and encourage absorption by improving everything from your building’s exterior lighting and signage to the landscaping and facade.
When done alongside efficiency retrofits, they let you tell a coherent story to tenants and buyers about long-term stewardship of your building.
C-PACE spreads your repayment over decades, so you can drive NOI gains quickly with these upgrades.
As a result, you can reduce your operating costs and widen the difference between your gross income and actual expenses.
Even small increases in NOI can make a difference in your property’s value in cap-rate-sensitive markets.
Act now to improve your near-term cash flow and long-term value
Don’t wait for lending conditions to improve to take advantage of C-PACE.
By acting now, you have better chances at increasing your property’s long-term value and cash flow. That’s because:
- Energy-intensive buildings already face scrutiny during refinance and sale discussions
- Insurance carriers are pricing climate exposure more aggressively.
- Tenants with sustainability requirements are bypassing inefficient space.
With C-PACE, you can respond with capital that won’t drain your liquidity or compete with senior debt capacity.
Because more states are enabling C-PACE and more lenders are participating, it’s becoming easier and cheaper to use this type of financing.
Now is a good time to use C-PACE to pay for big building upgrades.
The structure gives you affordable long-term capital and helps your building run more efficiently.
It also keeps you from getting hit with brown discounts that inefficient buildings face when you hold or sell them.
