Amazon halts construction on HQ2 in northern Virginia

Amazon is hitting the ground running on the second phase of the HQ 2 megaproject in northern Virginia, the company announced Friday.

The end of HQ2 is predicted to bring 25,000 new Amazon employees to an area near the Pentagon in Arlington, Virginia. The first phase of the project, called Met Park, is scheduled to open this summer as planned. A company spokeswoman said Amazon has hired 8,000 new employees for the facility, which will measure 2.1 million square feet in size.

Now, the retail giant said it will delay the start of construction on the second phase of its headquarters, Penplace.

“We are always evaluating space plans to ensure they suit our business needs and create a great experience for employees, and as Met Park will have space to accommodate more than 14,000 employees , so we’ve decided to move the groundbreaking to PenPlace (the second phase of HQ2 is a little out there),” John Schoettler, vice president of Worldwide Real Estate and Facilities, said in a statement to CBS News.

The announcement comes after the Seattle-based company announced the largest corporate layoffs in its history, shedding 18,000 jobs. earlier this year, It has also cut money-losing projects, such as the Alexa voice assistant team. Amazon joins other tech companies slashing costs after booming during EpidemicWhich includes Alphabet, Microsoft and Meta.

The company said the construction halt is not related to the layoffs, and plans to eventually host 25,000 workers at the location have not changed.

company “Stay[s] Committed to Arlington, Virginia and the greater capital region — including investing in affordable housing, funding computer science education in schools throughout the region, and supporting dozens of local nonprofits, Schoettler said.

“I told you so”

Amazon launched the project in 2018 after inviting cities to a nationwide bidding war for the chance to host the company’s second campus. It chose northern Virginia and New York City, but dropped his new york plans Plans to bring the company under the deal came after local elected officials and labor leaders objected to nearly $3 billion in taxpayer subsidies.

Some seized the news of the Northern Virginia stoppage as an opportunity to say “I told you so.”

State Senator Mike Giannaris said, “Maybe the billion-dollar subsidy for the world’s largest corporation to build the office was a really bad idea.” Twitter,

Virginia’s bid for HQ2 came with a promise to invest in the regional workforce, particularly Virginia Tech’s undergraduate campus, which is under construction a few miles from Amazon’s under-construction campus in Crystal City.

Nevertheless, 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 top $150,000 annually. Those incentives were worth about $550 million for an estimated 25,000 jobs.

Arlington County also promised Amazon a cut of its hotel-tax revenue, on the theory that hotel occupancy would increase significantly after Amazon built its campus. This incentive, initially estimated at approximately $23 million, depends on how many square feet of office space Amazon occupies in the county.

Susan Clark, a spokeswoman for the Virginia Economic Development Partnership, said state officials are not concerned about Amazon meeting its commitments. A total of 8,000 employees working at the new headquarters are already running about 3,000 ahead of expectations, he said.

Clarke said no incentive money has yet been paid to Amazon. The company is scheduled to submit its first application on April 1 for the payments, which will be based on job creation from 2019 to 2022. Amazon will receive its first grant payment on or after July 1, 2026.

In a statement, Democratic US Rep. Don Baer, ​​who represents the district, asked the company to “immediately update leaders and stakeholders on any new major changes to this project, which is so important to the capital region.”

Arlington County Board Chairman Christian Dorsey said during a news briefing Friday that Amazon has not earned any of the performance-based incentives and has not received any funding from the county. He said it’s unclear how long the delay could be, but it’s “not really hopeless” because officials there initially projected the buildout would be completed by 2035. Amazon previously said it planned to complete the project by 2025.

“Amazon is still very much committed — as we understand it — to certainly deliver on all of their plans and obligations within the window that they envisioned when they made the deal to come here,” Dorsey said. Said.

Dorsey shared that the company informed him about the pause before the information was released to the public. He said Amazon didn’t give a reason for the delay, but it was not challenging to speculate that it was linked to economic uncertainty in the county.

“They’re really trying to take a pause and think about it consciously. And make decisions that make sense not only in light of current circumstances but anticipate future circumstances.”

CBS News’ Irina Ivanova contributed reporting.

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