PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):



	June 30, 2018			December 31, 2017
Leasehold improvements	$	41,003		$	4,715
Computer equipment and software	15,507			14,146
Buildings	14,530			—
Furniture and fixtures	4,028			1,609
Laboratory equipment	1,991			5,959
Construction in progress	1,839			22,114
	78,898			48,543
Less: accumulated depreciation and amortization	(14,154		)	(22,800		)
Property and equipment, net	$	64,744		$	25,743

Depreciation expense was $1.2 million and $0.6 million for the six months ended June 30, 2018 and 2017, respectively.

Leased Premises Placed in Service

In May 2017, we entered into a Lease Agreement (the “Lease”) with Ascentris 105, LLC (“Ascentris”) for office and research facilities located at 1851, 1801, and 1751 Harbor Bay Parkway, Alameda, California (the “Premises”). The Lease was amended in October 2017 and June 2018 to increase the space leased to an aggregate of 134,765 square feet. For a description of the Lease, see “Note 12. Commitments” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018. In June 2018, we relocated our offices and research facilities to the Premises. Accordingly, we placed into service $59.5 million in related Leasehold improvements, Buildings, Furniture and fixtures and Computer equipment and software, portions of which were included in Construction in progress at prior period ends. We are continuing to review the allocation of these additions between Leasehold improvements and Furniture and fixtures.

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 Topic 840, Leases (“Topic 840”). Accordingly, for accounting purposes, we were deemed to be the owner of such portions of the Premises during the construction period. As such, we capitalized 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. 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 financing obligation in Other long-term liabilities. In June 2018, upon placing of the assets in service and in accordance with Topic 840, due to our continuing involvement in the Premises the Lease did not qualify for sale-leaseback accounting. Accordingly, the assets placed into service include the $14.5 million estimated fair value of the building shells that we are deemed to own. We have also recorded a related financing obligation of $0.7 million in Other current liabilities and $20.6 million in Financing obligation for build-to-suit lease in the accompanying Condensed Consolidated Balance Sheets for the buildings and related landlord allowance earned in the second quarter of 2018. Buildings are depreciated over their estimated 40 year useful life.