PROPERTY AND EQUIPMENT

Property and equipment were as follows (in thousands):



	December 31, 2017			December 31, 2016
Computer equipment and software	$	14,146		$	13,738
Laboratory equipment	5,959			4,310
Leasehold improvements	4,715			6,646
Furniture and fixtures	1,609			2,240
Construction in progress	22,114			19
	48,543			26,953
Less: accumulated depreciation and amortization	(22,800		)	(24,882		)
Property and equipment, net	$	25,743		$	2,071

Depreciation expense was $1.2 million, $1.0 million and $1.4 million during the years ended December 31, 2017, 2016 and 2015, respectively.

Build-to-Suit Lease

On May 2, 2017, we entered into a Lease Agreement (the “Lease”) with Ascentris 105, LLC (“Ascentris”), to lease 110,783 square feet of space in office and research facilities located at 1751, 1801, and 1851 Harbor Bay Parkway, Alameda, California (the “Premises”). On October 16, 2017, we executed an amendment to the Lease for 19,778 square feet of additional space located at the Premises with terms consistent with the original Lease. See “Note 12. Commitments” for a description of the Lease.

In connection with the Lease, we received a tenant improvement allowance of $7.7 million from Ascentris, for the costs associated with the design, development and construction of tenant improvements for the Premises. We are obligated to fund all costs incurred in excess of the tenant improvement allowance and to certain indemnification obligations related to the construction activities. We evaluated our involvement during the construction period and determined the scope of the tenant improvements on portions of the Premises including the building shells did not qualify as “normal tenant improvements” under Accounting Standards Codification (“ASC”) Topic 840, Leases. Accordingly, for accounting purposes, we are the deemed owner of such portions of the Premises during the construction period. As such, we will capitalize the construction costs as a build-to-suit property within property and equipment, net, including the estimated fair value of the building shells that we are deemed to own at the lease inception date, as determined using a third-party appraisal. The capitalized construction costs will also include the estimated tenant improvements incurred by Ascentris. Accordingly, we capitalized $14.5 million of costs related to the Lease in construction in progress as of May 2, 2017, with a corresponding build-to-suit lease obligation in Other long-term liabilities. As of December 31, 2017, we have capitalized an additional $6.6 million of construction in progress for tenant improvements related to the Premises. As of December 31, 2017, we have also prepaid an additional $11.1 million for future constructions costs which is included in Other long-term assets on the accompanying Consolidated Balance Sheets.

Once the construction is complete, we will consider the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have been transferred back to Ascentris, as evidenced by a lack of continuing involvement in the leased property. If the arrangement does not qualify for sale-leaseback accounting treatment, the building assets will remain on the accompanying Consolidated Balance Sheets at their historical cost.