Amazon is halting construction of its second headquarters in Virginia as it seeks to cut costs across the company, according to reports from Bloomberg And CNBC. While Amazon still expects to complete the first phase of its headquarters in June, the company is suspending work on most of the project across the street.
The company’s headquarters in Arlington, Virginia, called HQ2, should consist of two parts: Metropolitan park, an “urban campus” that can accommodate 25,000 employees, and PenPlace, a complex of three 22-story buildings with a corkscrew-shaped glass tower 100 meters high. PenPlace, the second phase of the project, is the part affected by the delay.
John Schoettler, head of real estate at Amazon, confirmed the move in a statement Bloomberg and CNBC. “We always evaluate space plans to make sure they fit our business needs and create a great experience for employees,” explains Shoettler. And since Met[tropolitan] Park will accommodate more than 14,000 employees, we decided to shift PenPlace’s groundbreaking a bit.” It’s still not clear how long Amazon will pause construction, and the company has not immediately responded The edgerequest for comment.
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 employees back to the office three days a week in May. According to BloombergAmazon told Arlington County Board Chair Christian Dorsey that it would “continue to issue permits for the second phase of HQ2 this year,” indicating it could begin construction on the second phase next year.
“Our second headquarters has always been a multi-year project and we remain committed to Arlington, Virginia and the larger capital city,” said Schoettler. Bloomberg.
Amazon decided to locate its sprawling headquarters in Northern Virginia in 2019 after facing massive opposition from New York residents and local lawmakers over the proposed HQ2 plans in Long Island City, Queens. Virginia offered Amazon up to $750 million in incentives to build its headquarters in the state Amazon say at the time, it would invest more than $2.5 billion to build its campus, “leading to the creation of thousands of indirect jobs in construction, construction services, hospitality and other service industries across the region.”
The halt is yet another cost-cutting measure for Amazon, which consolidated its hardware and service teams last November and laid off more than 18,000 employees in January. Last quarter, Amazon reported better net sales during the holiday season, but still had one of its least profitable quarters in years. It earned $0.3 billion for 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 pausing the HQ2 project isn’t the only thing the company is doing to cut costs.
CNBC reports that Amazon is also shutting down eight of its brick-and-mortar Go convenience stores in Seattle, New York City, and San Francisco. Amazon first announced it would close some physical stores during the earnings call in Februarywhile CEO Andy Jassy indicated that Amazon will also delay the expansion of its Fresh supermarkets until it finds a format that “resonates with customers”.
“Like any physical retailer, we periodically review our store portfolio and make optimization decisions along the way,” Amazon spokesperson Jessica Martin told CNBC. “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 develop our Amazon Go stores.
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