(Dollars in thousands)
	2018			2017
Land	$	4,305		$	3,564
Buildings		19,490			8,632
Furniture, fixtures, and equipment		11,837			8,262
Leasehold improvements		1,363			1,126
Construction in progress		83			4,467
Total cost		37,078			26,051
Less accumulated depreciation		(11,775	)		(9,883	)
Total bank premises and equipment	$	25,303		$	16,168

There were no premises and equipment classified as held for sale as of December 31, 2018 or 2017. As of December 31, 2016, assets held-for-sale consisted of three full service retail banking properties. These properties were transferred from land and buildings to assets held for sale during 2016 due to Mid Penn’s intent to sell them during January 2017. An impairment charge of $142,000 was recorded on one of the properties at December 31, 2016 and included as a separate component in noninterest expense on the Consolidated Statements of Income. On January 20, 2017, Mid Penn consummated the sale of the three properties for an aggregate purchase price of $2,240,000, which exceeds Mid Penn’s combined carrying value by approximately $346,000. Two of the properties are being leased back by Mid Penn for a period of at least 15 years, and the respective gains on the sales of those properties will be recognized over the life of the leases.

As of December 31, 2017, construction in process included (i) a commercial building and related improvements in Harrisburg, (ii) two vacant and undeveloped lots adjacent to the commercial building; and (iii) land, building, and improvements related to a newly constructed branch in Halifax, PA. The commercial building and adjacent lots in Harrisburg, PA were being renovated as of December 31, 2017 to serve as an administrative center for the Mid Penn, replacing two administrative offices which were previously leased. The renovations were substantially completed in February 2018, and Mid Penn employees took occupancy at that time. The new full-service office in Halifax, PA opened on January 8, 2018.

Depreciation expense was $2,395,000 in 2018, $1,464,000 in 2017, and $1,658,000 in 2016.

On January 1, 2019, as a result of the adoption of ASU 2016-02, Leases, the remaining balance of the deferred sale/leaseback gain was eliminated through an opening adjustment to retained earnings. The adoption of this standard also resulted in an increase to both other assets and other liabilities to record right-of-use lease assets and corresponding lease liabilities for all of Mid Penn’s leased facilities. Please reference Note 26, Recent Accounting Pronouncements, for more information.

As of December 31, 2018, Mid Penn was obligated to utilize certain premises under certain non-cancelable operating leases, which expire at various dates through the year ending December 31, 2035. Many of these leases contain renewal options and certain leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses, or proportionately adjusted for increases in consumer or other price indices. Three of Mid Penn’s operating leases are with related parties. The rental expense paid to related parties was $320,000 in 2018, $352,000 in 2017, and $348,000 in 2016. The future minimum payments to related parties are $208,000 (2019), $214,000 (2020), $186,000 (2021), $175,000 (2022), $175,000 in 2023, and $1,700,000 thereafter.

In 2016, Mid Penn entered into two subleasing agreements with escalation clauses to two unrelated parties. The first sublease agreement began on April 1, 2016, while the second sublease began on July 1, 2016. Both subleases end on March 31, 2021.

The following summary reflects the future minimum rental payments by year under Mid Penn’s operating leases as of December 31, 2018, including a breakdown of the sublease rental income and future minimum payments owed to related parties.

(Dollars in thousands)
	Lease Obligation		Sublease Rental Income		Net Rental Expense
2019		2,171		81		2,090
2020		1,970		81		1,889
2021		1,603		20		1,583
2022		1,464		—		1,464
2023		1,245		—		1,245
thereafter		6,691		—		6,691
	$	15,144	$	182	$	14,962

Rental expense in connection with leases was $1,433,000 in 2018, $1,087,000 in 2017, $716,000 in 2016.