Construction on the second phase Amazon’s HQ2 in Virginia has been paused, amid cost cutting at the e-commerce giant
Amazon has joined other big names in the tech industry that are currently reassessing their real-estate portfolios, after it confirmed it has paused construction at its second headquarter location.
Amazon confirmed to CNN that it has paused construction on its second headquarters in northern Virginia. However it has only paused the second phase construction. The first phase is expected to open in June.
The development comes as Amazon is engulfed in a cost-cutting exercise after rapid expansion during the Covid-19 pandemic. It has already closed three warehouses in the UK for example.
Second phase construction
Amazon in January this year also said it would lay off more than 18,000 staff worldwide, mostly from its e-commerce and human resources divisions.
Now CNN has reported that Amazon is pausing construction of the second phase of its HQ2 in Virginia.
John Schoettler, Amazon’s real estate chief, reportedly said the company is pushing back the groundbreaking of the second phase of the sprawling new headquarters. The first phase is still under construction and expected to open in June.
“We’ve decided to shift the groundbreaking of PenPlace (the second phase of HQ2) out a bit,” Schoettler was quoted as saying in a statement. “Our second headquarters has always been a multi-year project, and we remain committed to Arlington, Virginia, and the greater Capital Region.”
Schoettler added that Amazon has already hired more than 8,000 employees at the headquarters and the company is excited to welcome them to the first phase of the new campus, dubbed Met Park, this June.
Zach Goldsztejn, an Amazon spokesperson, told CNN that the pause is not a result or indicative of role eliminations at the company.
Goldsztejn said Amazon’s long-term intention and commitment regarding HQ2 remains unchanged, including the company’s plans to bring 25,000 corporate and tech jobs to the new headquarters.
Indeed, Washington DC at one stage had been widely tipped as leading the race for the location of Amazon’s second headquarters.
But in November 2018 Amazon chose Queens in New York, as well as a site in Northern Virginia for its two secondary headquarters – known collectively as HQ2.
Amazon’s plan had been to invest $5 billion in the construction and operation of the two campuses, including the creation of 50,000 new jobs.
All of this attracted huge interest from various US states, which offered all types of tax incentives to lure the firm to their state.
But in February 2019 Amazon announced that it had dropped its plans to build one of its second headquarters in New York, after the e-commerce giant encountered unexpected opposition to its plans.
Amazon also had second thoughts about the New York deal due to the unexpected hostility from Queens residents, and the firm was also reportedly very concerned about demands to allow its New York workers to unionise.
Amazon’s move comes as a growing number of tech companies rethink their real estate footprint and investments, amid the economic downturn and global uncertainty.
Facebook-parent Meta, Microsoft, Salesforce and Snap have each closed offices or announced plans to cut back on real estate in recent months.
Microsoft for example paused development of a new campus, and the city of San Francisco (home to many tech firms) is struggling to contend with the dual impact of remote working and office closures.