Amazon’s decision to delay construction of its second headquarters in Virginia, known as HQ2, has raised eyebrows and questions about the company’s long-term plans. The decision comes after the company experienced the largest round of layoffs in its history and is shifting plans around remote work.
John Schoettler, Amazon’s real estate chief, stated that the company has decided to shift the groundbreaking of PenPlace, the second phase of HQ2, due to the first phase having space to accommodate more than 14,000 employees. Schoettler emphasized that 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 several years ago.
This delay in construction may have a significant impact on the local economy. When Virginia won the competition to land HQ2, it promised to invest in the regional workforce, particularly a graduate campus of Virginia Tech that is currently under construction just a couple of miles from Amazon’s under-construction campus in Crystal City. The state also promised $22,000 for each new Amazon job, with incentives projected at about $550 million for 25,000 projected jobs, not to be paid out until 2024 at the earliest.
The delay in construction will also affect the hotel industry in the area, as Arlington County 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.
Despite the delay, Amazon’s spokesperson Zach Goldsztejn stated that the construction pause is not a result of the company’s latest job cuts or indicative of them. 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.
Amazon’s decision to delay the construction of its second headquarters in Virginia reflects the company’s need to evaluate its space plans and create a great experience for employees. While the delay may have a short-term impact on the local economy, Amazon remains committed to Arlington and the region in the long term.