NEW YORK (AP) – Amazon is pausing construction of its second headquarters in Virginia following the largest round of layoffs in the company’s history and its plans for remote work.
The Seattle-based company is delaying the start of construction on PenPlace, the second phase of development at its northern Virginia headquarters, Amazon real estate chief John Schoettler said in a statement. He said the company has already hired more than 8,000 employees and will welcome them to the Met Park campus, the first phase of development, when it opens this June.
“We are constantly evaluating space plans to ensure they meet our business needs and to create a great experience for employees, and since Met Park will accommodate more than 14,000 employees, we have decided to delay PenPlace’s groundbreaking ( the second phase of HQ2) are a bit off,” said Schoettler.
He also stressed that the company “remains committed to Arlington” and the region that Amazon — along with New York City — chose a few years ago as the site for its new headquarters, known as HQ2. More than 230 municipalities initially applied to host the projects. New York won the contest by promising nearly $3 billion in tax breaks and grants, among other things, but opposition from local politicians, union leaders and progressive activists caused Amazon to scrap its plans there.
In February 2021, Amazon announced it would build an eye-catching 350-foot Helix Tower to anchor the second phase of its redevelopment plans in Arlington. The new office towers should accommodate more than 25,000 workers when completed. Amazon spokesman Zach Goldsztejn said those plans have not changed and the pause in construction is not a result of — or indicative of — the company’s recent job cuts, which have affected 18,000 of the company’s employees.
The layoffs were part of a broader cost-cutting effort to reduce Amazon’s growing workforce amid sluggish sales and fears of a potential recession. Meta, Salesforce, and other tech companies — many of which have been hiring incessantly for the past several years — have done the same.
Amid the job cuts, Amazon has urged its employees to return to the office. Last month, Amazon CEO Andy Jassy said the company would require employees at the company to return to the office at least three days a week, a departure from the previous policy that allowed executives to control the way their teams work to call The change, which goes into effect on May 1, has sparked some resistance from employees who say they prefer to work remotely.
Goldsztejn said the company expects to proceed with what it calls pre-construction work for construction in Virginia later this year, including applying for permits. He said the final timeline for the second phase of the project is yet to be determined.
When Virginia won the competition to host HQ2, it did so less with outright incentives and more with a promise to invest in the region’s workforce, particularly in a Virginia Tech graduate campus just a few miles from the under-construction campus of Amazon is located in Crystal City.
Nonetheless, there were significant direct incentives. The state promised $22,000 for each new Amazon job on the condition that the average worker salary for those new jobs was $150,000 per year. These incentives totaled approximately $550 million for 25,000 proposed jobs.
Arlington County also promised Amazon a cut in its hotel tax revenue on the theory that hotel occupancy would increase significantly once Amazon expands its campus. That incentive, originally estimated at about $23 million, depends on how many square feet of office space Amazon occupies in the county.
Suzanne Clark, a spokeswoman for the Virginia Economic Development Partnership, said state officials are not concerned about Amazon meeting its commitments. The total of 8,000 employees now employed at the new headquarters is already around 3,000 more than expected at this point, she said.
She said no stimulus money has yet been paid to Amazon. The company is expected to submit its first payment request on April 1, based on job creation from 2019 to 2022. Amazon would then receive its first grant payment on or after July 1, 2026.
In a statement, Democratic U.S. Rep. Don Beyer, representing the district, called on the company to “promptly notify leaders and stakeholders of any new significant changes in this project, which remains very important to the capital region.”
Arlington County Chief Executive Christian Dorsey said during a Friday news conference that Amazon did not earn any of the performance-based incentives and received no funding from the county. He said it’s unclear how long the delay might last, but it’s “not really disappointing” as officials there originally forecast the expansion to be completed by 2035. Amazon had previously announced that it would complete the project by 2025.
“Amazon remains very committed — as we understand it — to fulfilling all of its plans and commitments within the window provided when they closed the deal to come here,” Dorsey said.
Dorsey said the company informed him of the hiatus before the information was released. He said Amazon hasn’t given a reason for the delay, but it’s not hard to guess that it’s related to the county’s economic uncertainty.
“They’re really trying to take a break and consciously think about it. And make decisions that make sense not only given current conditions, but also anticipated future conditions.”
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Barakat reported from Falls Church, Virginia.