Why Amazon built HQ2 and how the Covid pandemic has reshaped it

Six years ago, Amazon launched a lottery-style contest for a place to build a second headquarters. The competition has attracted bids from 238 states, counties and cities vying to be the next anchor of the dominant online retailer and second largest private employer.

This week, Amazon officially opened the doors to the first part of its new East Coast headquarters, dubbed HQ2, in Northern Virginia. The first phase, called Metropolitan Park, includes two 22-story office towers that can house 14,000 of the 25,000 employees Amazon plans to bring in Arlington. About 2,900 employees have already moved on, and Meat Park will have 8,000 employees in the fall.

Amazon built its headquarters in Seattle in 1994, in part due to the region’s deep pool of tech talent and Microsoft’s presence in nearby Redmond, Washington. The company’s Seattle campus now spans tens of millions of square feet across more than 40 office buildingsThe larger Puget Sound region is home to 65,000 corporate and technical employees at Amazon.

It raises the question of why Amazon, with its sprawling campus in Seattle and growing real estate footprint globally, would need to build a second headquarters.

Around 2005, as Amazon’s business grew and its Seattle campus swelled, founder and then-CEO Jeff Bezos began considering where the company should expand next.

In public meetings, employees would ask Bezos “if we were going to be in one place at a time,” John Schwettler, Amazon’s head of real estate, said in an interview.

“I think there’s this romantic notion that we as a company will only be so big that we’ll all be in the same building,” said Schwettler. “[Bezos] He said, well, we have long-term leases and when those leases come in, I’m going to work with John and the real estate team and we’ll figure out what to do next.”

Originally, Bezos suggested Amazon stay around the Puget Sound area, but the conversation then turned to recreating the “neighborhood” feel of its Seattle campus elsewhere, Schuettler said.

“We would have moved out to the suburbs and we could have taken some farmland and knocked down some trees, and we would have built a campus that would have been very steep,” he said. “They generally have a north or south entrance and exit east or west. When you put yourself in the middle of the urban fabric and create a walkable neighborhood, an 18-hour neighborhood, you become very outdoorsy, you become very much part of the community, and that’s what we wanted.”

Holly Sullivan, Amazon’s vice president of economic development, said it would have been difficult for Amazon to create this kind of environment had it “sprayed these employees around 15 other tech centers or 17 other tech centers around North America.”

“So what HQ2 offered was the opportunity for more in-depth collaboration and to be part of the neighborhood,” Sullivan said.

Amazon’s highly publicized search for a second home ran into some challenges. In 2018, Amazon announced that it would split HQ2 between the Long Island City neighborhood of New York and the Crystal City neighborhood of Arlington, Virginia. But after public and political outcry, Amazon canceled plans to build the company’s campus in Long Island City.

The company’s arrival in Arlington raised concerns about rising housing and displacement costs. The company said it has committed more than $1 billion to building and maintaining affordable homes in the area.

Schwettler said Amazon intends to focus much of its future growth in Arlington and in Nashville, Tennessee, where the company’s logistics hub is located. He added that it also plans to employ up to 12,000 people in the Seattle suburb of Bellevue.

“I don’t see us growing up in Seattle,” said Schwettler. “I think we’re pretty much being taken advantage of there.”

HQ2 has some of the same quirks as Amazon’s Seattle campus. There is a community banana stand with Banistas and whiteboards on the walls of the buildings’ elevators. Amazon has a dog-friendly atmosphere in its Seattle office, which has moved to Metropolitan Park, where there is a public dog park, and an exhibit wall for Amazon employees’ dogs. The towers feature plant-filled balconies and a rooftop urban farm that exudes the feel of “spheres,” botanical-garden-like workspaces anchored by Amazon’s Seattle office.

Amazon opens HQ2 at an uncertain time for the company and the broader technology sector. Many of the largest companies in the industry, including Amazon, have cut thousands of jobs and curbed spending after periods of slowing revenue growth and fears of a future recession.

Companies also face questions about what it’s like to operate in a post-pandemic environment. Many employees are used to working from home and are reluctant to return to the office. Amazon last month began requiring the company’s employees to work from the office at least three days a week, pushing back some workers who prefer greater flexibility.

Amazon modified the design of HQ2 around the expectation that employees wouldn’t come into the office every day.

Coworking spaces are more popular, Schwettler said, and there are fewer designated seats. He said employees might only be in an office 30% of the day, with the rest of their time spent in conference rooms, or having informal coffee meetings with co-workers.

“If we don’t come that day, no one else is going to use the place,” Schwettler said. “And that way, you can walk in, the office is open and it’s not personalized with family photos and that sort of thing. You can sit down and take full advantage of the space, and then go about your day.”

The shift to a hybrid work environment has also affected further development of Headquarters 2. Amazon said in March that it had pushed construction for PenPlace, the second phase of its Arlington campus. PenPlace is expected to include three 22-story office buildings, more than 100,000 square feet of retail space and a 350-foot tower called “The Helix,” which features outdoor corridors and indoor employee meeting areas surrounded by vegetation.

Schwettler said Amazon will monitor how employees work in two new Metropolitan Park buildings to let them know how the offices at PenPlace are designed.

Amazon has not said when it expects to begin development of the PenPlace, Schwettler said, but is continuing to move forward with the permitting and pre-construction process.

“We just want to be really vigilant, as we’re just opening these buildings up, to make sure we’re doing it right,” Sullivan said. “These are big investments for us. We own these buildings, and we want to give them a long shelf life.”