Amazon will pause construction of some buildings at its second headquarters in Arlington, Virginia.
CNBC News is reporting that John Schoettler, Amazon’s real estate head, said in a statement on Friday the company is pushing out the groundbreaking of PenPlace, the second phase of the sprawling northern Virginia campus.
The first phase of the campus, known as Metropolitan Park, is expected to open on time this June and will be occupied by 8,000 employees.
“We’re always evaluating space plans to make sure they fit our business needs and to create a great experience for employees, and since Met Park will have space to accommodate more than 14,000 employees, we’ve decided to shift the groundbreaking of PenPlace (the second phase of HQ2) out a bit,” Schoettler said.
Amazon confirmed the setback, even as company CEO Andy Jassy has taken steps to curtail expenses across the company in the face of slowing revenue and a gloomy economic outlook.
This forecast has led to Amazon laying off more than 18,000 employees, the largest number in its history. Amazon is also reevaluating its real estate portfolio and sunsetting some projects.
According to the Washington Post, at the end of the last decade, Amazon dangled its HQ2 campus with 50,000 jobs and billions of dollars in capital investments. Hundreds of cities across North America applied, offering hefty incentives to attract the company.
Amazon gave half the prize, $2.5 billion to Arlington. But the coronavirus pandemic hit in March 2020, keeping workers at home and idle. More recently, Amazon, like a number of other companies, suffered a decline in business because of overexpansion.
Meta, Salesforce, and other tech companies — many of which had gone on hiring binges in the past few years — have also been doing the same, reports WTVR Richmond.
Area officials maintain that the millions of dollars they promised to Amazon are still worth it. “We’re going to ultimately see all of the benefits that we envisioned at the beginning,” said Arlington County Board Chair Christian Dorsey (D). “It’s just going to take longer.”
Dorsey, who noted the project was never supposed to be complete before 2035, added that he was not surprised by Amazon’s pause. “Everyone from every sector is thinking about plans in a new light,” he said.
