The Mercury News

Amazon pauses constructi­on on 2nd HQ

Retailer says it is re-evaluating project to fit business needs

- By Haleluya Hadero and Matthew Barakat

Amazon is pausing constructi­on of its second headquarte­rs in Virginia following the biggest round of layoffs in the company's history and its shifting plans around remote work.

The Seattle-based company is delaying the beginning of constructi­on of PenPlace, the second phase of its headquarte­rs developmen­t in northern Virginia, Amazon's 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'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.

He also emphasized the company remains “committed to Arlington” and the local region, which Amazon picked — along with New York City — to be the site of its new headquarte­rs, known as HQ2, several years ago. More than 230 municipali­ties had 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 led Amazon to scrap its plans there.

In February 2021, Amazon said 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 were expected to welcome more

than 25,000 workers when complete. Amazon spokespers­on Zach Goldsztejn said those plans haven't changed and the constructi­on pause is not a result — or indicative of — the company's latest job cuts, which affected 18,000 corporate employees.

The layoffs were part of a broader cost-cutting move to trim down Amazon's growing workforce

amid more sluggish sales and fears of a potential recession. 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.

Amid the job cuts, Amazon has urged its employees to come back to the office. Last month, Amazon CEO Andy Jassy said the company would require corporate employees to return to the office at least three days a week, a shift from from the prior policy that allowed leaders to make the call on

how their teams worked. The change, which will be effective on May 1, has ignited some pushback from employees who say they prefer to work remotely.

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

When Virginia won the competitio­n to land HQ2, it did so less with direct

incentives, and more with promises to invest in the regional workforce, particular­ly a graduate campus of Virginia Tech that is under constructi­on just a couple of miles from Amazon's under-constructi­on campus in Crystal City.

Still, 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 is $150,000, annually. Those incentives were about $550 million for 25,000 projected jobs.

Arlington County also promised Amazon a cut of its hotel-tax revenue on the theory that hotel occupancie­s would increase significan­tly once Amazon builds out its campus. That incentive, projected initially at about $23 million, is dependent 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 filling its commitment­s.

 ?? NBBJ — AMAZON VIA ASSOCIATED PRESS ?? Amazon had planned to build a 350-foot Helix tower as an anchor for its redevelopm­ent plans in Arlington, Virginia.
NBBJ — AMAZON VIA ASSOCIATED PRESS Amazon had planned to build a 350-foot Helix tower as an anchor for its redevelopm­ent plans in Arlington, Virginia.

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