On the identical day that the lead developer of Amazon’s HQ2 undertaking, JBG Smith, praised the tech big for its “reaffirmed dedication” to the total undertaking, Amazon introduced on Friday it’s pausing development on the three.3M SF second half of the Virginia advanced, which is deliberate for 25,000 employees.
The transfer comes as Amazon ramps up what it introduced in January could be the layoff of 18,000 employees, about 6% of its workforce—the most important minimize introduced to this point in a wave of tech sector layoffs that started in H2 2022. Amazon’s cuts primarily are coming from its retail and human assets divisions.
A report Friday within the New York Occasions referred to as the tech big’s HQ2 pause “emblematic” of a tech sector that’s slashing payrolls and downsizing workplace footprints—whereas more and more embracing distant work and “struggling to determine what to do with their places of work as their employees proceed to spend at the least a part of the time working from house,” the Occasions report stated.
“For HQ2 to be on pause is emblematic of the pause that tech has hit all throughout the business,” Jeffrey Shulman, a College of Washington advertising professor who has studied Amazon’s affect on Seattle, instructed the NY Occasions. “HQ2 is the proper emblem of the place we have been and the place we’re, and simply how completely different they’re.”
Amazon, which reported a internet lack of $2.7B in 2022, additionally has eradicated hundreds of warehouse jobs it was planning so as to add to its payroll—by closing or cancelling 99 logistics services encompassing 32M SF in 30 states, a marketing campaign to slash working and capital bills that can proceed in 2023, in accordance with a report final week from MWPVL.
In pausing the second half of HQ2, Amazon is delaying the center of the undertaking, a cluster of workplace towers within the Nationwide Touchdown web site close to the Potomac River in Arlington and Alexandria.
The primary section of HQ2—a 2.1M SF workplace cluster often called Met Park—is on schedule to be accomplished in June, JBG Smith introduced on Friday. Met Park will present workplace house for an 8K portion of Amazon’s workforce that’s scheduled to maneuver in when the tower opens.
The development pause will delay Pen Place, the second and bigger section, deliberate to embody 3.3M SF throughout three workplace buildings and The Helix—the signature centerpiece of HQ2, a spiraling glass “double helix” amenity middle with “biophilic” landscaped terraces that can function “plantings native to the Mid-Atlantic area.”
JBG Smith’s press launch through which the REIT stated Amazon had “just lately reaffirmed” its dedication to the total HQ2 undertaking got here out a number of hours after the information about Amazon was reported.
“We’re vastly inspired by Amazon’s just lately reaffirmed dedication to its second headquarters undertaking and to hiring at the least 25,000 employees at HQ2,” JBG Smith CEO Matt Kelly stated, in an announcement.
JBG’s launch stated the developer is “transferring eagerly forward” with a number of initiatives surrounding HQ2, together with Virginia Tech’s $1B Innovation Campus, a 1,500-unit house advanced in Nationwide Touchdown and a retail village within the neighborhood it says can have 55 new tenants within the subsequent 18 months.
“All of these initiatives, together with billions of {dollars} in infrastructure enhancements, have been made potential by Amazon’s dedication to Nationwide Touchdown,” Kelly added, within the assertion. “We proceed to work with Amazon to advance plans for Pen Place and sit up for serving to Amazon understand its full imaginative and prescient for HQ2.”
JBG Smith offered the Nationwide Touchdown web site for HQ2 to Amazon for $354M in 2018, then was named the lead developer by Amazon for the undertaking. Whereas constructing HQ2, the DC-based REIT has initiated quite a few initiatives within the space.
In This autumn outcomes launched final month, JBG Smith posted losses of almost $19M. The federal authorities, which leases about 26% of JBG Smith’s DC portfolio, and Amazon, which leases about 14%, each are downsizing workplace footprints, with Amazon’s leases expiring this yr because the tech big strikes into the finished Part I of HQ2.
In a quarterly letter to buyers, Kelly expressed confidence that JBG Smith’s outcomes would enhance in 2023 because it completes its technique of transitioning to a majority multifamily platform.
Amazon’s layoffs are revealing the scope of the tech big’s leased workplace footprint in NYC. Amazon has a historical past of spreading its footprint in a metropolis all through a bevy of buildings, together with its Seattle HQ, which its staff are unfold round 15 buildings.
Filings with NYC’s Division of Labor in late January indicated that 299 staff being laid off by Amazon efficient April 18 work at greater than 5 completely different areas in Manhattan.
The affected Amazon places of work embrace 1440 Broadway; 7 West 34th Avenue, the place Amazon leased 417K SF from Vornado in 2014 for 17 years; 450 West 33rd Avenue, a Brookfield constructing often called 5 Manhattan West, the place Amazon inked a 15-year deal for 360K SF in 2017; 410 10th Avenue, a constructing the place Amazon is the anchor tenant.
