Amazon pauses construction on second headquarters in Virginia

NEW YORK (AP) — Amazon is pausing construction of its second headquarters in Virginia after its largest round of layoffs In the history of the company and its changing plans about remote work.

Amazon Real Estate Director John Schwettler said in a statement that the Seattle-based company is delaying the start of construction on PenPlace, the second phase of its development of its Northern Virginia headquarters. 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 the development, when it opens in June.

“We’re always evaluating space plans to make sure they fit our business needs and to create a great employee experience, and since the Met Park will have space to accommodate more than 14,000 employees, we decided to move PenPlace (HQ2 Phase 2) out a bit,” Schuettler said.

He also confirmed that the company remains “committed to Arlington” and the local area, which Amazon – along with New York City – chose as the location for its new headquarters, known as HQ2, several years ago. More than 230 municipalities initially competed to house the projects. New York won the competition by promising nearly $3 billion in tax breaks and grants, among other benefits, but opposition from local politicians, labor leaders and progressive activists prompted Amazon to cancel its plans there.

In February 2021, Amazon said it will build an eye-catching 350-foot Helix Tower to anchor phase two of its Arlington redevelopment plans. The new office towers are expected to receive more than 25,000 workers When you finish. Amazon spokesperson Zack Goldstegen said those plans haven’t changed and that the construction pause is not a result of — or an indication of — the company’s latest job cuts, which affected the company’s 18,000 employees.

The layoffs were part of a broader cost-cutting move to shrink Amazon’s growing workforce amid further stagnant sales. And fears of a possible recession. Meta, Salesforce, and other tech companies — many of which have been immersed in hiring in the past few years — have been doing the same, too.

Amid job cuts, Amazon has urged its employees to return to the office. Last month, Amazon CEO Andy Jassy said the company would require its employees to return to the office at least three days a week, a shift from a previous policy that allowed leaders to take a call about how their teams are doing. The change, which will be effective May 1, has prompted some pushback from employees who have said they prefer working remotely.

Goldsztejn said the company expects to move forward with what he called pre-construction work on construction in Virginia later this year, including applying for permits. He said that the final timing for the second phase of the project is still being determined.

When Virginia won the competition for land in HQ2, it performed less with direct incentives, and more with promises of investment in the regional workforce, particularly the under-construction Virginia Tech campus just a few miles from Amazon’s under-construction campus. in Crystal City.

However, there were significant direct incentives. The state promised $22,000 for each new Amazon job on the condition that the worker’s average salary for those new jobs be $150,000 per year. Those incentives amounted to about $550 million for an expected 25,000 jobs.

Arlington County has also promised Amazon a cut in hotel tax revenue on the theory that hotel occupancy will increase dramatically once Amazon builds its campus. This incentive, initially expected to be about $23 million, is dependent on the number of square feet of office space Amazon occupies in the county.

Susan Clark, a spokeswoman for the Virginia Economic Development Partnership, said state officials aren’t concerned about Amazon meeting its obligations. She said the total of 8,000 workers now employed at the new headquarters is already employed by about 3,000 workers, more than expected at this point.

She said no stimulus money has been paid to Amazon yet. The company is scheduled to file its first payment request on April 1, which will be based on job creation from 2019 through 2022. Amazon will then receive its first grant payment on or after July 1, 2026.

In a statement, Democratic US Rep. Don Baer, ​​who represents the district, called on the company to “immediately update leaders and stakeholders on any major new changes to this project, which continue to be very important to the D.C. area.”

Arlington County Board Chairman Christian Dorsey said during a press briefing Friday that Amazon has not received any of the performance-based incentives nor has it received any money from the county. It’s unclear how long the delay might be, he said, but it’s “not really disappointing” because officials there initially expected construction to be completed by 2035. Amazon had previously said it planned to complete the project by 2025.

“Amazon remains very committed – as we understand it – to making sure that all of their plans and commitments are met within the window that was envisioned when they made the deal to come here,” Dorsey said.

Dorsey shared with the company that notified him to previously stop releasing the information to the public. Amazon didn’t provide a reason for the delay, he said, but it wasn’t hard to guess that it was related to economic uncertainty in the province.

They are really trying to consciously stop and think about this. and make decisions that not only make sense in light of current conditions but expected future conditions.”

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Barakat reported from Falls Church, Virginia.