Amazon has announced that it is putting the construction of HQ2, its second headquarters unveiled to much fanfare in 2018, on hold due to the company’s slow growth in the wake of the coronavirus pandemic.
The Washington Post reports that Amazon has halted the construction of its HQ2, which was set to be developed in Arlington, Virginia. The project was planned to consist of three 22-story office buildings.
Amazon HQ2 design Helix (Amazon)
The action is the most recent example of Amazon’s cautious approach to growth after a decade of rapid growth. After overexpansion caused a decline in business, the company was forced to slow down hiring and growth at its warehouses. In recent months, it has also laid off 18,000 corporate workers. The business has also put a halt to the growth of its logistics network after admitting that it hired too many employees and added too many warehouses in response to the pandemic’s optimistic growth predictions.
A significant portion of Amazon’s expansion plans for the area included the PenPlace project, the second phase of HQ2. There were plans for three towers and over 3 million square feet of office space at the location, which was close to the Pentagon. The company has now decided to put the project on hold indefinitely, spelling trouble for Arlington’s office market which has taken a major hit recently due to record-high vacancy rates.
Area officials insist that the millions of dollars they promised to Amazon are still worthwhile despite the delay. Christian Dorsey, chairman of the Arlington County Board, stated: “We’re going to ultimately see all of the benefits that we envisioned at the beginning, it’s just going to take longer.”
Of the 25,000 employees Amazon planned to add in Arlington, more than 8,000 have already been hired. The company also plans to formally open Met Park, its first phase of construction in the county, in June. However, the PenPlace project’s delay serves as a reminder that the company’s formerly aggressive plans for commercial real estate in the nation should be seen as warning.
The construction pause is just a sign that Amazon is “adapting to current market conditions,” according to Terry Clower, director of the Center for Regional Analysis at George Mason University. Major construction projects are under pressure because the labor market in the construction sector is still tight and some supply chains are still constrained. He claimed that Amazon is waiting to see what the “new normal” in corporate demand will entail.
Read more at the Washington Post here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan
Read the full article here
Discussion about this post