As we look ahead into the first half of 2026, we polled our leading Originators across the U.S. to gather their insights for the year ahead. Recapitalizations have been leading the demand for C-PACE capital in 2025, but 2026 may bring a modest shift back into growth of new developments and adaptive reuse. Recapitalizations will still lead the demand for capital in the new year, and C-PACE will continue its double-digit growth trajectory as a core component for funding capital stacks.
“There is a pent-up demand for development. A significant amount of capital has remained on the sidelines as we have navigated uncertain economic times. As equity and capital flow into deals, banks are still reluctant to lend on development and construction projects – especially at large check sizes. With the banks being conservative, development deals are increasingly using C-PACE as a tool to get deals done – especially larger deals. As sponsors and developers set out to fill their capital stack without much excitement (and leverage) from banks, PACE Equity remains committed to helping move projects forward.” Andrew Freter, Director of Originations
“There are a lot of projects looking for financing going into the new year. I am hoping for a pullback in short term rates, but also in the longer term 10 Year UST, which could provide incentive for lenders to accept more risk and leverage. As we near the end of 2025, the prospect of that remains cloudy given sticky inflation and economic growth. C-PACE can help reduce project risk by providing non-recourse, long term, fixed rate financing and solving capital challenges.” David Oliverio, Originator, East
“There is a lot of excitement around C-PACE in the coming year. It is growing rapidly and becoming a material financing tool as traditional lenders continue to remain selective in the deals they are supporting, with lower leverage points. C-PACE has become a viable option for closing the gap that the lower leverage points leave behind, and truly moving projects forward to the finish line. Our flexibility in the capital stack, coupled with developers seeking creative capital structures, make C-PACE a solid choice as a lending instrument.” Julie Sommese, Originator, Midwest
“2026 marks the year commercial real estate lending gets back to basics: rates stabilizing at historically normal levels, sensational narratives and news giving way to number-driven analysis, and quality projects getting financed through sound underwriting — trends already emerging in late 2025. I anticipate stronger alignment between senior lenders and C-PACE providers as the financing structure matures. For select projects paused in 2024-2025, C-PACE will be the differentiator that gets deals over the line.” Dan McKenna, Originator, South
“After two years of tight capital markets, we’re finally seeing meaningful signs of easing. That momentum should accelerate into 2026 as the Fed continues rate cuts and construction costs stabilize. While lenders re-enter the market, senior leverage remains constrained—positioning C-PACE to shift from recapitalizations to a now better-known and accepted gap filler for new construction. Developers will increasingly rely on it as a strategic tool to unlock stalled projects. That said, don’t count recapitalizations out—many recently completed assets, particularly in multifamily, will continue to benefit from C-PACE as a means of de-stressing capital stacks.” Frank Swain, Originator, West
Learn more about the flexibility and core benefits of C-PACE to finance a transaction across the building life cycle.
Contact a PACE Equity Originator.