A rendering of Amazon HQ2 showing Helix, which includes a workspace, will also be open to the public on select weekends each month.

Courtesy: NBBJ

Amazon is suspending construction on its second headquarters, dubbed HQ2, in Virginia, the company confirmed to CNBC.

John Schoettler, Amazon’s head of real estate, said in a statement that the company is leading the groundbreaking for PenPlace, the second phase of a sprawling campus in northern Virginia. The first phase of the campus, known as Metropolitan Park, is expected to open on time this June and will employ 8,000 employees.

The move comes as Amazon CEO Andy Jassy takes steps to cut costs at the company amid slowing revenue and a bleak economic outlook. That led the company to announce the biggest layoffs in its history, totaling more than 18,000 employees, while reassessing its real estate portfolio and halting some projects.

“We’re always evaluating space plans to make sure they meet our business needs and to create a great employee experience, and because Met Park will have room for more than 14,000 employees, we’ve decided to move the groundbreaking PenPlace (second phase HQ2) a bit over,” Schoettler said in a statement. “Our second headquarters has always been a multi-year project, and we remain committed to Arlington, Virginia, and the greater metropolitan area.”

The news was first reported by Bloomberg.

PenPlace consists of three 22-story office buildings, more than 100,000 square feet of retail space and a 350-foot tower called “The Helix.” The development is larger than Metropolitan Park, which is south of PenPlace, and includes two additional 22-story office towers, as well as a mixed-use precinct with retail, restaurants and green space.

Amazon has chosen Arlington as the location for HQ 2, in addition to Long Island City in Queens, New York, as part of a closely watched search for a second headquarters that began in 2017. In 2019, the company announced it was scrapping plans to build its new headquarters in New York after facing pushback from local activists and city council leaders.

During the pandemic, the company quickly expanded its physical footprint and headcount, benefiting from a surge in online shopping. But in recent months, it has halted office expansion and construction of new buildings in Nashville and Bellevue, citing uncertainty about the impact of the pandemic on office work, Reuters reported.

Jassi announced earlier this month that Amazon would require corporate employees to spend at least three days a week in the office starting May 1, a move that drew backlash from some employees who said they preferred a more flexible approach to return to office plans.

Amazon has said it will create approximately 25,000 jobs over the next decade at HQ2 and the surrounding area. Amazon spokesman Zach Goldstein said the commitment remains unchanged.

The company expects to begin preconstruction work on other aspects of HQ2 later this year, Goldstein said.

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