Amazon suspends Virginia headquarters building in newest cost-cutting transfer

Amazon’s placing the development of its second headquarters in Virginia on maintain because it appears to be like to chop prices throughout the corporate, as reported earlier by Bloomberg and CNBC. Whereas Amazon’s nonetheless anticipated to finish the primary section of its headquarters this June, the corporate’s pausing work on the bigger portion of the challenge situated throughout the road.

The corporate’s Arlington, Virginia-based headquarters, dubbed HQ2, is meant to encompass two elements: Metropolitan Park, an “city campus” able to housing 25,000 employees, and PenPlace, a fancy with three 22-story buildings and a corkscrew-shaped glass tower standing 350 ft tall. PenPlace, the second section of the challenge, is the portion affected by the delay.

John Schoettler, Amazon’s head of actual property, confirmed the transfer in a press release to The Verge. “We’re all the time evaluating house plans to verify they match our enterprise wants and to create an amazing expertise for workers,” Shoettler explains in an emailed assertion. “And since Met[tropolitan] Park may have house to accommodate greater than 14,000 staff, we’ve determined to shift the groundbreaking of PenPlace out a bit.” It’s nonetheless not clear how lengthy Amazon will pause building, although.

The primary section’s June opening coincides with the corporate’s plans to deliver employees again to the workplace for 3 days per week in Might. In keeping with Bloomberg, Amazon advised Arlington County Board Chair Christian Dorsey that it “would proceed this yr with allowing on the second section of HQ2,” which signifies it may kick off building on the second section subsequent yr.

“Our second headquarters has all the time been a multiyear challenge, and we stay dedicated to Arlington, Virginia, and the larger Capital Area,” Schoettler says.

Amazon determined to plant its sprawling headquarters in Northern Virginia in 2019 after dealing with large pushback from New York residents and native lawmakers on its proposed HQ2 plans in Lengthy Island Metropolis, Queens. Virginia supplied Amazon as much as $750 million in incentives to construct its headquarters within the state, with Amazon saying on the time it will make investments over $2.5 billion to construct its campus, “driving the creation of 1000’s of oblique jobs in building, constructing providers, hospitality and different providers industries throughout the area.”

The halt in building comes as yet one more cost-cutting measure for Amazon, which consolidated its {hardware} and providers groups final November and laid off over 18,000 employees in January. This previous quarter, Amazon reported higher internet gross sales throughout the holidays, however nonetheless had one in every of its least worthwhile quarters in years. It earned $0.3 billion for the quarter, down from $14.3 billion on the identical time in 2021, and posted its first internet loss since 2014 at $2.7 billion.

However pausing the HQ2 challenge isn’t all the corporate’s doing to curtail bills.

CNBC experiences that Amazon’s additionally shutting down eight of its bodily Go comfort shops in Seattle, New York Metropolis, and San Francisco. Amazon first introduced that it will shutter a few of its bodily shops throughout its earnings name in February, whereas CEO Andy Jassy indicated that Amazon may also sluggish the enlargement of its Contemporary supermarkets till it finds a format that “resonates with clients.”

“Like every bodily retailer, we periodically assess our portfolio of shops and make optimization choices alongside the way in which,” Amazon spokesperson Jessica Martin says in an emailed assertion to The Verge. “On this case, we’ve determined to shut a small variety of Amazon Go shops in Seattle, New York Metropolis, and San Francisco. We stay dedicated to the Amazon Go format, function greater than 20 Amazon Go shops throughout the U.S., and can proceed to study which areas and options resonate most with clients as we hold evolving our Amazon Go shops.” 

Replace March 4th, 2:18PM ET: Up to date so as to add statements from John Schoettler and an Amazon spokesperson.