Amazon has suspended construction of its Virginia headquarters in its latest cost-cutting move

Amazon is holding off on building its second headquarters in Virginia as it looks to cut costs across the company, according to reports from Bloomberg and CNBC. While Amazon is still expected to complete the first phase of its headquarters this June, the company’s work has stopped on a larger part of the project located across the street.

The Arlington, Virginia-based company’s headquarters, called HQ2, would be comprised of two parts: Metropolitan Park, an “urban campus” capable of housing 25,000 workers, and PenPlace, a complex with three 22-story buildings and a corkscrew shape. glass tower standing 350 feet tall. PenPlace, the second phase of the project, is the part affected by the delay.

John Schoettler, Amazon’s head of real estate, confirmed the move in a statement Bloomberg and CNBC. “We’re constantly reviewing space plans to make sure they fit our business needs and to create a great experience for employees,” Shoettler explained. “And since Met[tropolitan] The Park has space to accommodate more than 14,000 employees, we decided to move the groundbreaking to PenPlace. It’s unclear when Amazon will stop building, and the company did not immediately respond The VergeThis is a request for comment.

Amazon had one of its least profitable quarters in years

The opening of the first phase in June coincides with the company’s plan to bring workers back to the office for three days per week in May. According to BloombergAmazon told Arlington County Board Chair Christian Dorsey that it will “move forward this year with the approval of the second phase of HQ2,” indicating that it could begin construction on the second phase next year.

“Our second headquarters will always be a multiyear project, and we remain committed to Arlington, Virginia, and the greater Capital Region,” Schoettler said. Bloomberg.

Amazon decided to plant its largest headquarters in Northern Virginia in 2019 after facing a lot of pushback 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, with Amazon saying at the time it would invest more than $2.5 billion to build its campus, “prompting the creation of thousands -thousands of indirect jobs in construction, building services, hospitality and other service industries throughout the region.”

The construction halt comes as another cost-cutting move for Amazon, which consolidated its hardware and services teams in November and laid off more than 18,000 workers in January. This past quarter, Amazon reported better net sales during the holidays, but still had one of its least profitable quarters in years. It earned $0.3 billion for the quarter, up from $14.3 billion in the same time in 2021, and posted its first net loss since 2014 at $2.7 billion.

But halting the HQ2 project isn’t all the company is doing to cut costs.

CNBC reported that Amazon is also closing eight of its physical Go convenience stores in Seattle, New York City, and San Francisco. Amazon first announced that it would close some of its physical stores during an earnings call in February, while CEO Andy Jassy indicated that Amazon will also slow the expansion of Fresh supermarkets until it finds the a format that “engages customers.”

“Like any physical retailer, we periodically review our portfolio of stores and make optimization decisions along the way,” Amazon spokeswoman Jessica Martin told CNBC. “In this case, we 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, operating more than 20 stores on Amazon Go across the US, and will continue to learn which locations and features will most appeal to customers as we continue to develop our Amazon Go stores.

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