LEASES

The Company leases certain land, buildings, equipment and vehicles under noncancelable operating leases that expire at various dates through 2036. Many of the building leases obligate the Company to pay real estate taxes, insurance and certain maintenance costs and contain multiple renewal provisions, exercisable at the Company's option. Leases that contain predetermined fixed escalations of the minimum rentals are recognized in rental expense on a straight-line basis over the lease term. Cash or rent abatements received upon entering into certain operating leases are also recognized on a straight-line basis over the lease term.

At December 31, 2018 the approximate future minimum lease payments for operating leases were as follows (in millions of dollars):



Year	Future Minimum Lease Payments
2019	$	65
2020	49
2021	36
2022	27
2023	18
Thereafter	38
Total minimum payments required	233
Less amounts representing sublease income	(11		)
	$	222

In the fourth quarter of 2018, Grainger consolidated three office locations into one main location in the Chicago area, which increased the future minimum lease payments by $48 million and sublease income by $6 million. The new lease has a 10-year term.

Rent expense was $76 million, $76 million and $81 million for 2018, 2017 and 2016, respectively. These amounts are net of sublease income of $3 million, $2 million and $2 million for 2018, 2017 and 2016.

Capital leases as of December 31, 2018 are not considered material. Capital lease obligations are reported in Long-term debt.

Effective January 1, 2019, the Company implemented ASU 2016-02, Leases and subsequent modifications ASUs 2018-01, 2018-10, 2018-11 and 2018-20. See Note 1 to the Financial Statements for more information.