CPACE Financing: Creating Opportunities for Developers of Sustainable, Energy-Efficient Self-Storage FacilitiesCPACE Financing: Creating Opportunities for Developers of Sustainable, Energy-Efficient Self-Storage Facilities
If you’re building an energy-efficient self-storage project, you have a unique financing option available to you, though you may not know about it. It’s referred to as CPACE (Commercial Property Assessed Clean Energy), and it opens opportunities for developers and owners who are willing to invest in sustainability. Learn about this long-term, low-cost loan option.
February 3, 2025

There’s an increased emphasis on eco-friendly building practices across many industries today, and self-storage is one of them. If you’re developing a facility with energy efficiency in mind, there’s a unique financing option available to you, though you may not be aware of it. It’s referred to as CPACE (commercial property assessed clean energy). This niche tool allows developers and owners to fund sustainable elements of their project, such as climate-controlled units.
CPACE can finance up to 35 percent of the stabilized value of a self-storage project and can be amortized over 30 years, similar to a residential mortgage. Legislation is in place in 40 states, with expanded CPACE programs available and more flexibility in how to deploy the funds. Improvements include longer maturity dates and the option to include plumbing and property-resiliency expenses. Let’s explore more reasons why it’s a boon for self-storage.
CPACE and Self-Storage: A Perfect Match
Self-storage projects are great applications for CPACE financing due to the large role that a climate-controlled environment plays in facility operations. For example, my company recently funded a facility in Romulus, Michigan, that’ll comprise seven single-story buildings containing 298 climate-controlled and 177 drive-up units. The developer received a $1.5 million, 25-year CPACE loan alongside a $5.5 million bank loan to complete a $9 million funding package.
The money will be used for the building envelope, Energy Star windows, high-efficiency HVAC and plumbing, and LED lighting. These energy-conservation measures are expected to save $57,616 annually, with a payback period of eight and a half years.
Since 2022, more regional banks and debt funds have begun combining CPACE financing with their mortgages. These lenders see the advantage of using this extra funding to help borrowers reach an acceptable loan-to-cost or loan-to-value ratio, so they qualify without needing additional partners or extending their credit limit. This approach allows banks to lend with less risk.
Increased State Adoption
The next cycle of self-storage development will see investors benefit more now that CPACE financing is available in nearly every state after more than a dozen recently adopted new or expanded laws. This borrowing option helps developers make their projects financially feasible. The Midwest was an early adopter, with Minnesota seeing more CPACE transactions than any other state. Ohio and Michigan aren’t far behind.
However, with the most recent changes, the largest benefit will be felt along the East Coast. For example, after a few starts and stops, New York City is now open for business. Given the sheer size of that commercial real estate market, and the pent-up demand, this region should prove to be a massive benefactor of CPACE financing. New Jersey was slow to roll out its program, but we anticipate that happening by early 2025.
Growth markets like Georgia and North Carolina are launching statewide programs for the first time. As capital follows population growth into the Southeast, self-storage developers in these areas can expect to benefit from lower financing costs and nonrecourse, 30-year loans.
This expansion of CPACE financing presents a unique opportunity for self-storage developers and owners. Being long-term and low-cost, this financing can significantly enhance the feasibility of energy-efficient projects nationwide.
As more states adopt CPACE programs, self-storage professionals are well-positioned to take advantage of this innovative financing tool and drive sustainable growth in the sector. Don’t overlook this long-term, low-cost capital source that’ll help transactions move across the finish line!
Matthew McCormack is the senior vice president of originations for PACE Loan Group, a Minneapolis-based lender that provides direct CPACE financing for commercial and industrial real estate projects nationwide. Matthew has six years of experience as a CPACE originator and is responsible for loan origination and underwriting, and portfolio monitoring. To reach him, email [email protected].
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