In 2020, the commercial real estate market underwent an unprecedented disruption as a result of economic volatility. Fortunately, 2021 saw a return to steady demand for construction projects, but with that came higher-than-average increases in construction costs as a result of material and labor shortages, and inflation. In the middle of 2021, final construction costs for a commercial project had increased by 4.5% according to JLL research.

Currently, across the country, rising construction costs and delivery delays are causing significant turmoil for commercial real estate projects. JLL estimates that through 2022 construction costs will increase between 4% to 7%. These increases have caused some developers to delay and even cancel planned construction projects, which might have penciled a year or two ago but no longer do.

Luckily, innovative options exist to alleviate the financial strain that rising construction costs are causing. Commercial Property Assessed Clean Energy (C-PACE) has several beneficial use cases, but one that is particularly pertinent is its ability to fill financing gaps resulting from rising constructions costs. C-PACE is a financing tool that enables commercial real estate owners to access low-cost, long-term, fixed-rate financing for sustainability improvements including energy efficiency, water conservation, and renewable energy projects that are underway, planned, or recently completed – helping to fund construction cost escalations and overruns.

Authorized by a state-level government policy that classifies clean energy upgrades as a public benefit, these measures can be financed with no money down and then repaid as a benefit assessment on the property tax bill over a term that matches the useful life of the measures. Over 38 states throughout the country have passed legislation to allow C-PACE financing.

In Los Angeles County, California, a developer recently leveraged C-PACE financing to fill a capital gap from increasing construction costs on a 132-unit, six-story student housing complex. About $6.5M in C-PACE capital was utilized to finance energy-efficient development costs including plumbing and seismic improvements. “We were very pleased to include C-PACE in the development capital stack as it reduced our equity need and was accretive to our ROI,” said Bryan Elsey, Owner, Elsey Holdings. “The Nuveen Green Capital team was a pleasure to work with – efficiently guiding us through our first C-PACE project in addition to getting a new municipality opted into the C-PACE program.”

Clearwater PACE, which is one of the nation’s leading C-PACE capital advisors, has been able to help stalled projects come to completion when they otherwise may not have been able to. A developer in Albany, NY that is currently working with our partner, Nuveen Green Capital, began construction on his hotel before COVID and was faced with a senior lender who backed out before closing as a result of the pandemic. The project had been stalled for 2 years. Nuveen Green Capital was able to step in and source a senior lender that was supportive of the developer’s full-electrification building plans and Nuveen Green Capital’s C-PACE was utilized as a source of supplemental financing. This will allow the sponsor to complete the construction of the half-finished clean energy project, creating jobs and bringing economic activity and environmental benefits to their community.

Unexpected delays and cost overruns can be challenging to navigate in a commercial construction project. Clearwater PACE can help efficiently and effectively fill these funding gaps and get a project back on the path to completion.

About Clearwater Capital Management

Clearwater Capital Management LLC d/b/a Clearwater PACE (“Clearwater”) is a New York-based Real Estate Investment and Advisory Firm that helps commercial real estate developers and owners secure the best debt, equity, and C-PACE financing terms and executions based on its well-established relationships in the capital markets. Clearwater’s team is comprised of real estate investment professionals rooted in operational excellence backed by their professional experience in Real Estate Private Equity and Investment Banking. For more information, visit or

About Nuveen Green Capital 

Nuveen Green Capital is a national leader in sustainable commercial real estate financing solutions and an affiliate of Nuveen, the investment manager of TIAA responsible for $1.2 trillion in assets under management as of September 30, 2021. Established in 2015 by the C-PACE industry’s founders and standard-setters, Nuveen Green Capital is a private capital provider dedicated to making sustainability a smart financial decision for commercial real estate owners who seek to improve the energy, water and resiliency performance of their property. For more information, visit