Published - March 06, 2023 @ 2:58 PM (EET)

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Months after Amazon.com Inc. (NASDAQ:AMZN) announced job cuts spanning more than 18,000 roles amid a sobering economic outlook, the e-commerce giant, on Friday, said it would push back the start of construction for the next phase of its Virginia headquarters.

Amazon's real estate chief, John Schoettler, confirmed the pause in a statement to Bloomberg news but said the company remains committed to the Arlington project, having devoted to spending $2.5 billion and hiring some 25,000 workers.

Meanwhile, officials in Northern Virginia largely downplayed Amazon's decision to pause plans for a second phase of its corporate campus. In a call with reporters, chair of the Arlington County Board, Christian Dorsey, said it doesn't concern him, adding that he is "quite understanding."

WHY IT MATTERS

Earlier, Amazon had said the Virginia headquarters, a multi-year investment named HQ2 would create 25,000 jobs.

Under an incentive package used to attract Amazon to the region, over time, the company could receive up to $750 million from Virginia if it creates enough high-paying jobs and up to $23 million from Arlington country.

The first phase, dubbed Metropolitan Park or Met Park, consisting of two 22-story office buildings with 2.1 million square feet of office space, is due to be completed in June and will be finished and occupied as planned, initially hosting 8,000 employees.

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Mr. Dorsey and other officials pointed out Amazon's faster-than-expected hiring at the campus to date as a sign that the project is already paying dividends.

NOW WHAT

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From the end of the March 2022 quarter through the end of the year, Amazon reduced staff by 81,000, closing the year with 1,541,000 employees, down 4% from a year earlier.

However, despite the slower opening, the company said the construction pause doesn't imply more job cuts are coming.

Amazon has long stood out within the tech sector due to its relentless pursuit of real estate. According to an analysis by BMO Capital Markets based on data from CoStar Group, the e-commerce giant had leased 19.7 million square feet of US office space as of October 2022.

Separately, though Amazon has committed to expanding its brick-and-mortar grocery store business, the e-commerce giant is shuttering eight cashier-less Go convenience stores.

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