Amazon has announced that it is putting the creation of its second headquarters, HQ2, in Virginia on hold. The company’s real property head, John Schoettler, stated that the groundbreaking of PenPlace, the second part of the northern Virginia campus, will be delayed. The first part of the campus, Metropolitan Park, is still expected to open on time in June and will house 8,000 employees. This move comes as Amazon CEO Andy Jassy attempts to cut costs across the company due to slowing sales and a bleak financial outlook. As a result, Amazon has announced its largest layoffs in history, affecting over 18,000 employees. The company is also reevaluating its real estate portfolio and cancelling some projects.
Schoettler stated that Amazon is constantly evaluating space plans to ensure they fit business needs and create a great experience for employees. Since Metropolitan Park can accommodate more than 14,000 employees, the groundbreaking of PenPlace will be delayed. However, Amazon remains committed to Arlington, Virginia and the greater Capital area. PenPlace includes three 22-story office buildings, over 100,000 square feet of retail space, and a 350-foot-tall tower called “The Helix”. The development is larger than Metropolitan Park and includes more 22-story office towers as well as a mixed-use site featuring retail, restaurants, and green spaces.
Amazon chose Arlington as the site of HQ2 along with the New York City community of Queens in a highly publicized search for a second headquarters that began in 2017. However, the company announced in 2019 that it would halt plans to build its new headquarters in New York after facing pushback from local activists and city council leaders. During the Covid pandemic, Amazon rapidly expanded its physical footprint and headcount as it benefited from a surge in online shopping. However, it has recently pulled back on office expansion and the construction of new buildings in Nashville, Tennessee and Bellevue, Washington due to uncertainty surrounding the pandemic’s impact on in-office work.
In February, Jassy announced that Amazon would require corporate staffers to spend at least three days per week in the office starting on May 1st. This move prompted backlash from some employees who preferred a more flexible approach to return-to-work plans. Amazon has stated that it will create approximately 25,000 jobs over the next decade at HQ2 and in the surrounding area. Company spokesperson Zach Goldsztejn confirmed that this commitment remains unchanged. Amazon expects to begin pre-construction work on other parts of HQ2 later this year.