The second headquarters of Amazon is being paused

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John Schoettler, Amazon’s real estate chief, said the company is pushing back the groundbreaking of the second phase of the sprawling new headquarters. The first phase is still under construction and is expected to open in June.

“Our second headquarters has always been a multiyear project, and we remain committed to Arlington, Virginia, and the greater Capital Region,” Schoettler says.

In February of 2021, Amazon stated that it would be constructing a 350-foot tall tower in Arlington, the second phase of which would be the Helix tower. The new office towers were expected to welcome more than 25,000 workers when complete. Amazon has not changed its plans and the construction pause is not related to the company’s recent job cuts, according to the company’s spokesman.

Amazon picked New York and Virginia for its new headquarters after a yearlong search, but later scrapped its plans for New York due to backlash from the community.

The move by Amazon comes as a number of tech firms rethink their real estate footprint and investments, amid a downturn in the tech industry driven by a shift in demand and broader economic uncertainty. Facebook-parent Meta, Microsoft, Salesforce and Snap have each shuttered offices or announced plans to cut back on real estate in recent months.

The effects of those pulls can be felt in places like Atlanta, where Microsoft paused development of a new campus, to San Francisco where some businesses say they are facing ripple effects of multiple tech office closings.

Some community members have said the tech pullback feels like “broken promises” and raised concerns about the potential fallout from these moves in their neighborhoods.

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Amazon has pledged to use the project, the first phase of which already dominates the Crystal City neighborhood in which it is located, to eventually bring at least 25,000 high-paid workers to Virginia. Atlanta, Georgia and Austin, Texas, along with Arlington, competed to get the project in order to get elite workers and associated tax revenue. It is unclear how many people or new tax dollars Amazon will bring to Arlington.

HQ2’s first phase, known as Metropolitan Park, will open on schedule in June of this year, Amazon says. But the company no longer has a date for construction of the larger second phase and its signature swirl, all of which was originally planned to include about 2.8 million more square feet of office space and 115,000 square feet for retail.

That ratio could theoretically change. Amazon will be given more time to study its space best used when there is a construction pause. The company’s entirely remote work policy will end in May, as it will require its employees to be in the office three days a week. The regime change will likely change the way employees use the office space.

The job cuts were part of a broader cost-cutting move to trim down its growing workforce amid more sluggish sales and fears of a potential recession. Meta, Salesforce and other tech companies — many of which had gone on hiring binges in the past few years — have also been trimming their workforce.

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The company will apply for permits for pre-construction work in Virginia later this year, according to Goldsztejn. He said final timing for the second phase of the project is still being determined. The company said in the past it was planning to complete the project in 25 years.

The halt in construction comes as yet another cost-cutting measure for Amazon, which consolidated its hardware and services teams last November and laid off over 18,000 workers in January. During the holidays, Amazon reported better net sales than in the prior quarter 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.

Amazon periodically assesses its portfolio of stores and makes adjustments along the way, as any physical store would do, according to Jessica Martin. There are a number of Amazon Go stores closed in Seattle, New York City, and San Francisco. We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores across the U.S., and will continue to learn which locations and features resonate most with customers as we keep evolving our Amazon Go stores.”