The FASB Rule Changing How Occupiers Think About Real Estate

• Lease of mind: The new lease accounting rules have forced occupiers to become more sophisticated in the way that they think about their leased spaces.

• Zesty earnings: Zillow reported earnings growth, but investors still worry about the rough road to growth ahead.

• Great data: Michigan has recorded one of its largest developments to date as 250 acres of farmland is about to become a $7 billion data center.

• Join the live webinar: Multifamily operators are using automation to streamline management and improve the resident experience. Sign up

Policy & Finance

Changing In-Tenancy Chargebacks Can Redefine Multifamily Management

For years, corporate real estate teams viewed leases as administrative paperwork—rent payments, renewal options, and signatures tucked away in accounting files. That changed in 2019, when the Financial Accounting Standards Board (FASB) introduced a rule that pulled leases out of the footnotes and onto company balance sheets. Overnight, leases became measurable liabilities, forcing executives to weigh every square foot as a financial commitment, not just an operational need.

The impact was immediate. What had once been a back-office process suddenly came under audit scrutiny, with every discount rate and renewal option requiring precision. Lease management evolved into a cross-functional discipline involving finance, real estate, and leadership. The data collected for compliance also opened new possibilities—companies began using it to guide portfolio strategy, workforce planning, and space optimization.

Now, AI and automation are pushing the transformation further. Algorithms can analyze lease data alongside market trends, alerting occupiers when to renegotiate or downsize. At the same time, tenants are demanding transparency from landlords, turning them into data partners rather than rent collectors. In the FASB era, the most valuable property isn’t just well located—it’s well documented.

Overheard

Zillow Wins on Paper but Faces a Tough Housing Reality

Zillow’s third-quarter results looked good on paper. Revenue came in ahead of forecasts, driven by growth in its rentals and mortgage businesses. But even as CEO Rich Barton highlighted momentum in the company’s “housing super-app” vision, the stock slid sharply after the earnings release. The problem isn’t performance—it’s the market itself. High rates, falling transaction volumes, and fewer listings continue to weigh on the entire housing ecosystem. As Barton put it, Zillow is “navigating a constrained housing market that still has no clear signs of loosening.”

Investors may also be wary of Zillow’s competitive posture. Its ongoing feud with Compass and escalating rivalry with CoStar have turned what was once a clear digital real estate leader into a company fighting on multiple fronts. Compass has accused Zillow of misusing data, while CoStar continues to pour resources into Homes.com, directly challenging Zillow’s listings dominance. These battles may help Zillow defend market share, but they also raise costs and regulatory scrutiny.

Zillow’s strong top line wasn’t enough to outweigh those risks. With the housing market stuck in a slowdown and competition heating up, investors are questioning whether the company can deliver sustainable growth—or if it’s just winning short-term battles in a long, expensive war.

The Biggest Data Center Deal in Michigan History

Developer Related Companies is planning a massive data center campus worth more than $7 billion on 250 acres of farmland outside Detroit, marking one of the largest projects yet in the booming AI infrastructure race. The site in Saline Township, near Ann Arbor, will provide more than one gigawatt of computing power—enough to supply over 750,000 homes—and is part of the $300 billion “Stargate” initiative between Oracle and OpenAI to build next-generation computing capacity. Oracle will lease and equip the facility, while Michigan utility DTE Energy will provide the power. The project overcame local resistance after Related offered concessions like farmland preservation funds and sustainable cooling systems, eventually winning approval as Michigan’s largest-ever private investment.

The development signals Related’s aggressive pivot into digital infrastructure, a sector far removed from its high-profile residential and mixed-use projects like Hudson Yards. Since launching its data center arm in 2022, the firm has committed $500 million toward a $45 billion pipeline that includes projects in Ontario, Wyoming, and Missouri. The Saline campus, nicknamed “The Barn,” joins a wave of enormous data center deals across the U.S., fueled by surging demand from AI platforms that require vast amounts of power and hardware to train and operate large models. For Oracle and OpenAI, the Michigan build-out is a key node in their broader plan to expand compute capacity across the country, alongside other multibillion-dollar sites from Texas to the Midwest.

For commercial real estate, this deal underscores how data centers are becoming one of the industry’s dominant asset classes. As AI development drives record levels of investment, land, power, and connectivity are emerging as the new cornerstones of property value. Yet the scale and speed of projects like Stargate also hint at a potential bubble, echoing past cycles where capital raced ahead of sustainable demand. Whether these campuses become the digital backbone of a new economy or stranded assets in the next correction will depend on how fast AI-driven revenues materialize and how adeptly developers like Related can balance ambition with community and infrastructure realities.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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