3. Investment in Real Estate

Real estate by property type and segment includes the following:


	December 31,		December 31,
	2018		2017
Development property:
Residential real estate	$	105,323	$	100,279
Hospitality		3,726		4,131
Commercial leasing and sales		73,128		53,896
Forestry		2,144		2,488
Corporate		2,497		2,571
Total development property		186,818		163,365

Operating property:
Residential real estate		7,344		7,344
Hospitality		93,046		103,616
Commercial leasing and sales		111,471		110,491
Forestry		19,765		19,510
Other		50		50
Total operating property		231,676		241,011
Less: Accumulated depreciation		67,500		71,752
Total operating property, net		164,176		169,259
Investment in real estate, net	$	350,994	$	332,624

Development property consists of land the Company is developing or intends to develop for sale or future operations and includes direct costs associated with the land, development and construction costs and indirect costs. Residential real estate includes residential communities. Hospitality development property consists of the improvement and expansion of existing beach club property, land and construction costs related to two gulf-front vacation rental homes and development costs and improvements for other property. Commercial leasing and sales development property primarily consists of land and development costs for commercial and industrial uses, including the Pier Park Crossings JV, land holdings near the Northwest Florida Beaches International Airport and Port of Port St. Joe. Development property in the hospitality and commercial leasing and sales segments will be reclassified as operating property as it is placed into service.

Operating property includes the following components:


		December 31,		December 31,
		2018		2017
Land and land improvements	$	75,663	$	77,788
Buildings and building improvements		144,730		152,272
Timber		11,283		10,951
		231,676		241,011
Less: Accumulated depreciation		67,500		71,752
Total operating property, net	$	164,176	$	169,259

Operating property includes property that the Company uses for operations and activities. Residential real estate operating property consists primarily of residential utility assets. The hospitality operating property includes the WaterColor Inn, WaterSound Inn, golf courses, a beach club, marinas and certain rental properties. Commercial leasing and sales operating property includes property developed or purchased by the Company and used for retail and commercial rental purposes, including property in the Pier Park North JV, VentureCrossings and Beckrich Office Park as well as other properties. Forestry operating property includes the Company’s timberlands. Operating property may be sold in the future as part of the Company’s principal real estate business.

Depreciation expense related to real estate investments was $6.0 million, $6.2 million and $6.0 million in 2018, 2017 and 2016, respectively. Depletion and amortization expense related to the Company’s timber operations was $0.5 million in each of 2018, 2017 and 2016.