Amazon pauses construction at HQ2 in Northern Virginia

Amazon announced on Friday that it has delayed the second phase of its giant HQ2 project in Northern Virginia.

HQ2 is expected to eventually bring 25,000 new Amazon employees to Arlington, Virginia, in an area near the Pentagon. The first phase of the project, dubbed Meat Park, is set to open this summer as planned. A company spokesperson said Amazon has hired 8,000 new employees for the facility, which will be 2.1 million square feet.

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

“We are always evaluating space plans to ensure they fit the needs of our business and to create a great employee experience, and since the Met Park will have space to accommodate more than 14,000 employees, we have decided to change the position of PenPlace,” John Schwettler, Vice President of Worldwide Properties and Facilities, said in a statement. He told CBS News that Phase 2 Headquarters 2) is out a little bit.

The announcement comes after the Seattle-based company announced the largest corporate layoffs in its history, cutting 18,000 jobs. earlier this year. It also reduced loss-making projects, such as Alexa voice assistant team. Amazon joins other technology companies cutting costs after booming through it epidemicincluding Alphabet, Microsoft, and Meta.

The company said that the construction halt was unrelated to the layoffs, and that plans to host 25,000 workers on the site had not changed.

The company remains[s] committed to Arlington, Virginia, and the greater metropolitan area — which includes investing in affordable housing, funding computer science instruction in schools throughout the region, and supporting dozens of local nonprofits,” Schwettler said.

“I told you so”

Amazon began the project in 2018 after cities were invited to a nationwide bidding war for the chance to host the company’s second campus. She chose Northern Virginia and New York City, however He dropped his plans in New York After local elected officials and labor leaders objected to the nearly $3 billion in taxpayer benefits the company was to receive under the deal.

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

“It might have been a really bad idea to subsidize the world’s largest corporation in the world with billions of dollars to build an office,” Senator Mike Giannaris said. Twitter.

Virginia’s bid for HQ2 came with promises of investment in the regional workforce, particularly Virginia Tech’s under-construction campus just a few miles from Amazon’s under-construction campus in Crystal City.

However, there were significant direct incentives. The state promised $22,000 for each new Amazon job on the condition that the worker’s average salary for those new jobs be $150,000 per year. Those incentives amounted to about $550 million for an expected 25,000 jobs.

Arlington County has also promised Amazon a cut in hotel tax revenue on the theory that hotel occupancy will increase dramatically once Amazon builds its campus. This incentive, initially expected to be about $23 million, is based on the number of square feet of office space Amazon occupies in the county.

Susan Clark, a spokeswoman for the Virginia Economic Development Partnership, said state officials aren’t concerned about Amazon meeting its obligations. She said the total of 8,000 workers now employed at the new headquarters is already employed by about 3,000 workers, more than expected at this point.

No stimulus money has been paid to Amazon yet, Clark said. The company is scheduled to file its first payment request on April 1, which will be based on job creation from 2019 through 2022. Amazon will then receive its first grant payment on or after July 1, 2026.

In a statement, the US Democratic Rep. Don Beyer, who represents the district, called on the company to “immediately update leaders and stakeholders on any major new changes to this project, which remains very important to the metropolitan area.”

Arlington County Board Chairman Christian Dorsey said during a press briefing Friday that Amazon has not received any of the performance-based incentives nor has it received any money from the county. It’s unclear how long the delay might be, he said, but it’s “not really disappointing” because officials there initially expected construction to be completed by 2035. Amazon had previously said it planned to complete the project by 2025.

“Amazon remains very committed – as we understand it – to making sure that all of their plans and commitments are met within the window that was envisioned when they made the deal to come here,” Dorsey said.

Dorsey shared that the company had notified him of pre-stop releasing the information to the public. Amazon didn’t provide a reason for the delay, he said, but it wasn’t hard to guess that it was related to economic uncertainty in the province.

“They’re really trying to consciously stop and think about this. And make decisions that not only make sense given current conditions but expected future conditions.”

CBS News’ Irina Ivanova contributed to this report.