PACE Equity Finance Insights on the Second Half of 2026
As capital markets reset and liquidity remains constrained, C-PACE financing has emerged as a core, institutional-grade component of the modern capital stack. Against a backdrop of reduced leverage, tighter credit boxes, and elevated cost of capital, sponsors are increasingly using C-PACE to optimize capital structures—introducing long-duration, fixed-rate financing that enhances proceeds, compresses weighted average cost of capital, and mitigates refinance risk. With accelerating lender acceptance, increasing transaction scale, and broad applicability across asset classes, C-PACE financing is a strategic tool for capital formation, enabling sponsors to bridge funding gaps and execute transactions in a disciplined and efficient market environment.
We talked to our leading originators across the U.S. to get their thoughts on the state of CRE and PACE financing for the remainder of 2026.
“As the C-PACE market evolves and matures, developers are embracing it more as a way to complete their capital stack in a more efficient manner and generate higher returns. Banks have also seen the value of partnering with us to book more business. C-PACE has become one of the most versatile sources of capital that can help solve many problems that have persisted in the CRE world in past few years.”
Kevin Wosko, Originator, Northeast
“Chicago capital markets are reopening – but not roaring back. More transactions are closing vs. 2023-2024 but leverage remains lower at 60-70% and lenders are much more conservative on underwriting, and less flexible than before. Asset class matters; multifamily is the favorite in Chicagoland, while industrial is stabilizing and office is in distress. Ground-up continues to be tougher to finance than value-add or adaptive reuse although that trend seems to be slowly righting itself. Capital markets are open again, just much more disciplined and favoring multifamily and industrial. 2026 seems to be the ‘reset and re-pricing’ year.”
Julie Sommese, Originator, Midwest
“C‑PACE demand has surged over the past six months, driven by tightening credit conditions and broader capital‑market stress that is pushing developers toward long‑term, fixed‑rate alternatives. Deal sizes continue to trend upward, with many transactions now landing in the high‑double‑ and low‑triple‑digit millions – clear evidence of growing lender acceptance of C‑PACE as an accretive, stabilizing element of the capital stack. Banks are increasingly warming to C‑PACE as a complementary tool that preserves their senior position while helping borrowers fill capital‑stack gaps without syndication risk or added balance‑sheet exposure. Much of the growth in C‑PACE demand mirrors demographic expansion across the U.S., particularly in the Pacific Northwest and Mountain West, where population inflows and development pipelines remain strong. On the product side, hospitality has emerged as the leading user of C‑PACE capital, followed closely by multifamily and senior living, each leveraging the structure to manage higher rates, extend runway, and unlock stalled projects.”
Don Schulz, Originator, Northwest
“From my perspective in the Mid-Atlantic and Southeast, there is still significant demand for quality commercial real estate development, particularly in multifamily, mixed-use, hospitality, and adaptive reuse projects. The challenge continues to be the capital stack, as traditional lenders remain conservative on leverage, underwriting, and construction exposure despite broader signs that liquidity is improving across the debt markets. C-PACE has increasingly become a mainstream financing solution rather than an alternative product, helping developers bridge funding gaps with long-term, fixed-rate capital that lowers overall weighted average cost of capital and reduces refinance risk. We are also seeing growing interest from municipalities and economic development organizations that recognize C-PACE as a tool to support housing supply, sustainability goals, and economic growth simultaneously. In markets like Virginia, awareness and adoption continue to accelerate as more sponsors, lenders, and local governments become comfortable with the structure and see successful projects close using C-PACE as a critical piece of the capital stack.”
Steve Farbstein, Originator, Mid-Atlantic
“Once a novel financing, C-PACE is now hitting the mainstream. The financing is becoming mature and more efficient. Given the benefits that C-PACE provides, It is hard to find a project today that is not considering C-PACE in the stack. Challenges still remain with senior lender consent, however, the list of lenders continues to grow and we can assist in finding those lenders for our clients. As economic uncertainty and rates calm down, I expect to see a boom in CRE projects and C-PACE in the stack.”
David Oliverio, Originator, East
“While we continue to see development, retrofit, and renovation projects come off the shelf, there continues to be some headwinds with banks as they recalibrate to this CRE market. C-PACE is increasingly being adopted by the market as the tool to get projects funded and over the finish line when traditional banks will not. The flexibility to pair C-PACE with multiple types of senior lenders – banks, debt funds, and private lenders – cannot be ignored. We continue to see C-PACE as the tool that finalizes a capital stack by adding leverage or, in some cases, taking the place of higher-cost debt to lower the cost of capital. In this market, C-PACE is about being dynamic and flexible to unlock projects that would otherwise be stalled.”
Andrew Freter, Director of Originations