Amazon is suspending construction on its second Virginia headquarters as it seeks to cut costs across the company, as previously reported. Bloomberg and CNBC. Although Amazon is still expected to complete the first phase of its headquarters this June, the company is pausing work on most of the project located across the street.
The company’s headquarters in Arlington, Virginia, dubbed HQ2, is supposed to consist of two parts: Metropolitan park, an “urban campus” capable of housing 25,000 workers; and PenPlace, a complex with three 22-story buildings and a 350-foot-tall glass corkscrew tower. PenPlace, the second phase of the project, is the part affected by the delay.
John Schoettler, Amazon’s head of real estate, confirmed the move in a statement to the edge. “We are always evaluating space plans to make sure they fit our business needs and to create a great employee experience,” Shoetler explains in an emailed statement. And since I met[tropolitan] Park will have space to accommodate more than 14,000 employees, we have decided to shake up the opening of PenPlace a bit.” However, it is still unclear how long Amazon will pause construction.
Amazon just had one of its least profitable quarters in years
The opening of the first phase in June coincides with the company’s plans to bring workers back to the office three days a week in May. According BloombergAmazon told Arlington County Board President Christian Dorsey that it would “proceed with permits for the second phase of HQ2 this year,” indicating it could break ground on the second phase as early as next year.
“Our second headquarters has always been a multi-year project, and we remain committed to Arlington, Virginia and the Greater Capital Region,” says Schoettler.
Amazon decided to plant its sprawling headquarters in northern Virginia in 2019 after facing massive pushback from New York residents and local lawmakers on its proposed plans for HQ2 in Long Island City, Queens. Virginia offered Amazon up to $750 million in incentives to build its headquarters in the state, with amazon saying at that time it would invest more than $2.5 billion to build its campus, “spurring the creation of thousands of indirect jobs in the construction, building services, hospitality, and other service industries throughout the region.”
The construction halt is being billed as another cost-cutting move for Amazon, which consolidated its hardware and services teams last November and laid off more than 18,000 workers in January. Last quarter, Amazon reported better net sales during the holidays, but still had one of its least profitable quarters in years. It made $0.3 billion in the quarter, down from $14.3 billion at the same time in 2021, and posted its first net loss since 2014 at $2.7 billion.
But halting the HQ2 project isn’t all the company is doing to cut costs.
CNBC reports that Amazon is closing down, too eight of its Go physical convenience stores in Seattle, New York City and San Francisco. Amazon first announced that it would close some of its physical stores during his earnings call in Februarywhile CEO Andy Jassy indicated that Amazon will also slow the expansion of its Fresh supermarkets until it finds a format that “resonates with customers”.
“Like any brick-and-mortar retailer, we regularly assess our store portfolio and make optimization decisions along the way,” Amazon spokeswoman Jessica Martin says in a statement emailed to the edge. “In this case, we have decided to close a small number of Amazon Go stores in Seattle, New York City, and San Francisco. We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores in the US, and will continue to learn which locations and features resonate most with customers as we continue to evolve our Amazon Go stores.”
Update March 4, 2:18 pm ET: Updated to add statements from John Schoettler and an Amazon spokesperson.
