Amazon suspends HQ2 construction in Northern Virginia

Amazon has put the second phase of its HQ2 mega project in Northern Virginia on hold, the company announced Friday.

HQ2 is projected to eventually bring 25,000 new Amazon employees to Arlington, Virginia, near the Pentagon. The first phase of the project, dubbed Med Park, is scheduled to open this summer. Amazon is hiring 8,000 new employees, which will be 2.1 million square feet, according to a company spokeswoman.

Now, the retail giant said it is delaying the start of construction on the second phase of its headquarters, PenPlace.

“We’re always evaluating space plans to ensure they fit our business needs and create the best employee experience, and given Med Park has room for over 14,000 employees, we’ve decided to move BenPlace’s initial phase (phase two of HQ2) slightly outside,” said Global Real Estate and Vice President of Facilities John Schoedler said in a statement to CBS News.

The Seattle-based company has cut 18,000 jobs after announcing the largest layoffs in its history. Earlier this year. It has also reduced money-losing schemes like Alexa voice assistant team. Amazon joins other tech companies that scale back costs after growth EpidemicIncluding Alphabet, Microsoft and Meta.

The company said the construction pause was unrelated to the layoffs, and that plans to eventually keep 25,000 workers at the site have not changed.

The company β€œis[s] “We are committed to Arlington, Virginia and the greater Capital Region β€” including investing in affordable housing, funding computer science education in schools across the region and supporting dozens of local nonprofits,” Schoedler said.

“That’s what I said”

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 Abandoned its New York plans The company was slated to receive under contract after local elected officials and labor leaders objected to nearly $3 billion in taxpayer subsidies.

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

“Giving the world’s largest corporation a multi-billion dollar grant to build an office is probably a very bad idea,” said state senator Mike Gianaris. Twitter.

Virginia’s bid for HQ2 has promised to invest in the regional workforce, especially with Virginia Tech’s graduate campus under construction two miles from Amazon’s under-construction campus in Crystal City.

However, there were significant direct incentives. The government promised $22,000 for each new Amazon job, and the average worker’s salary for those new jobs was $150,000 a year. Those incentives are about $550 million for 25,000 projected jobs.

Arlington County promised to reduce its hotel-tax revenue to Amazon on the theory that hotel occupancies would increase significantly once Amazon built its campus. That incentive, initially projected at about $23 million, depends on how many square feet of office space Amazon occupies in the county.

Suzanne Clark, spokeswoman for the Virginia Economic Development Partnership, said state officials are not concerned about Amazon meeting its obligations. A total of 8,000 workers now working at the new headquarters are already operating at this point, about 3,000 earlier than expected, he said.

Clark said Amazon has yet to receive any incentives. The company is scheduled to submit its first application on April 1 for payments based on job creation from 2019 to 2022. Amazon will receive its first grant amount on or after July 1, 2026.

In a statement, U.S. Rep. the Democrat who represents the district. Don Beyer called on the company to “immediately update leaders and stakeholders on any new major changes to this program that is so important to the Capital Region.”

Arlington County Board Chairman Christian Dorsey said during a news conference Friday that Amazon does not receive any performance-based incentives and that it does not receive any funding from the county. It was unclear how long the delay might be, but he said it was “not really disappointing” because officials there had originally predicted construction would be completed by 2035. Amazon has previously said it plans to complete the project by 2025.

“Amazon is still very committed β€” as we understand it β€” to certainly fulfilling all of their plans and commitments within the window that they envisioned when they reached the agreement to come here,” Dorsey said.

Dorsey notified him of the suspension in advance of the company’s public release of information. Amazon did not provide a reason for the delay, but he said it was not a stretch to speculate that it was linked to economic uncertainty in the region.

“They really try to take a pause and consciously think about it. And make decisions not just in light of current conditions, but in light of anticipated future conditions.”

Irina Ivanova of CBS News contributed reporting.

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