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Amazon pauses construction on second HQ in Virginia amid job cuts
- AustinDev 4y agoI'm sure they'll keep their tax benefits they got for selecting Virginia.
- red-iron-pine 4y agoVirginia didn't offer them much, except Arlington County, which through a few hotel tax breaks at them. VA got the nod because it's right outside of DC and the Pentagon. AWS wants that GovCloud money, and Bezos wants to be near the Washington Post / Congressmen. And for that reason VA didn't have to pander too hard.
- actionablefiber 4y agoMost of the tax benefits are performance-based and only kick in if Amazon meets certain thresholds for job creation, increases in local hotel stays, and total office space square footage used. https://www.washingtonpost.com/dc-md-va/2022/09/02/arlington-amazon-hq2-incentives-covid/ https://www.washingtonpost.com/dc-md-va/2022/09/02/arlington...
- AustinDev 4y agoWell, my pessimism got the best of me. I'm guessing states are getting wise to these sorts of things and putting making the incentives performance based now which is encouraging!
- jcranmer 4y agoIncentives have always largely been performance-based, I believe, but the cases you really hear about are the ones where the jurisdictions are desperate for the investment, and that desperation may make them extremely willing to renegotiate incentives to keep the company from picking up and moving. The most notable case in recent memory of outlandish incentives is the Foxconn plant in WI, where the original incentives were not paid out as Foxconn failed to meet even the lowest tranche of requisite investment. Wisconsin refused to pay, but this intersected with political sniping (as the Republicans, voted out of office, criticized the new Democratic administration for not paying up). The contract appears to have been renegotiated back to "normal" levels of incentives, which have been paid out as Foxconn has met those levels of investment.
- amateuring 4y agonot true
- aadvark69 4y agoThose are contingent on Amazon actually following thru with their investment
- AdmiralAsshat 4y agoCome on, Northern Virginia housing market crash!
- busterarm 4y agoNever going to happen. Unless somehow government became smaller and the people desiring access became fewer.
- mattgreenrocks 4y agoThe housing market here is very robust due to many jobs being linked to the government, often in groups which never see significant budget cuts. I anticipate a bit more deflation of property values, but not a crash. HQ2-proximate properties will probably not be able to maintain their asking price, but I'm guessing property owners will do the NoVA thing of sitting on overpriced property long enough to try to squeeze as much out of it as they can.
- actionablefiber 4y agoThat's not "the NoVA thing", really. It is a fact of life when you have 30-year fixed-rate mortgages. Rates are up. Buyers don't want to buy at the same prices with the new rates. Sellers don't want to sell at the lower prices. What you have is a drop in liquidity.
- stevehawk 4y agoIt is a NoVA thing. The '07/08/09 recession had minimal impact on the DC area housing market compared to the rest of the country. It peaked and fell like the rest but the fall wasn't as bad and the recovery was far quicker. The federal government and its related commercial contractors are the main ingredient in that.
- red-iron-pine 4y ago20 years of DoD led wars -- and another uptick because of Ukraine and supplying them -- means that there is a lot of $$$ for NoVA tech workers. Like, the recession happened... but Iraq or Afghanistan didn't stop...
- newaccount2021 4y agoI am likewise convinced, and always have been, that Google's downtown San Jose campus will never be fully built All of these tech companies are overinvested in real estate
- rco8786 4y agoEvery single company that owns commercial office space is currently overinvested.
- onlyrealcuzzo 4y agoPrior to the pandemic, these companies were doubling headcount every 6 years. Unless their growth rates sink a lot lower than pre-pandemic growth, they'll grow into that space in 10 years.
- busterarm 4y ago"Disco Stu: Didn't you know that Disco record sales were up 400% for the year ending 1976? If these trends continue, eyyy!"
- bitlax 4y agoGood thing I invested in pumpkins!
- busterarm 4y agoThis place is gonna smell classy all week.
- onlyrealcuzzo 4y agoAmazon and Google and MSFT and Apple were doing that through 2 recessions over 15+ years. Eventually it'll come to an end. But not sure why you're so certain the end is now.
- TheSoftwareGuy 4y agoCurious timing when they just announced Return to Office plans
- voytec 4y agoBut not yet announced next layoff waves.
- foobar_______ 4y agoRight - part of their leadership wants to to RTO now! The other part says "wait! offices are too expensive and even H2 isn't safe. Wacky world we're in.
- actionablefiber 4y agoIt's like that headline about Google making employees share desks. Seems like they are hell-bent on doing "worst of both worlds" hybrid instead of "best of both worlds" hybrid.
- cowsandmilk 4y agoThese decisions were made by the same people. They are opening up buildings with 14,000 seats in June in a city where they have 8,000 employees. There may be issues in May, finding desks for people won’t be an issue a month later.
- Ancalagon 4y agoTrying to keep their current RE portfolio value propped up while they simultaneously divest as fast and as quietly as possible out of commercial RE.
- ironlake 4y agoSo five years after cities collectively lost their minds trying to get Bezos to like them [1], Amazon is backtracking. The original search was for just one Second HQ, then they selected two: Virginia and New York. But when New York complained about the new altered deal, Amazon backtracked from that. I suspect this is a move to extract new concessions from Virginia government. Corporations can't be trusted, and shouldn't be trusted, this is why contracts exist. Amazon would never sign a contract that allowed another corporation to do this to them, why should Virginia allow Amazon to abuse the Second HQ selection process? [1] https://money.cnn.com/2017/10/04/technology/amazon-second-headquarters-city-proposals/index.html https://money.cnn.com/2017/10/04/technology/amazon-second-he...
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- georgeburdell 4y agoAs someone who has worked for an Amazon supplier (as in, Amazon uses our components for their data centers), they are well known to be extremely cheap and capricious. They are the worst of the big tech companies to work with
- IntelMiner 4y agoTheir "leadership principles" note "Frugality" as a core trait. It's possible that may be related
- fsociety 4y agoBut you get a door as a desk! How cool is that.
- hotpotamus 4y agoIt seemed cuter when Bezos was driving one of those as opposed to a half billion dollar yacht or a penis rocket.
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- paxys 4y agoI remember everyone here was shitting on "woke" New York for not bending down to Amazon's demands and ultimately driving them out. Turns out the city didn't crumble into ruin, and it was the correct decision after all.
- simonsarris 4y agoIf it was the correct choice, NYC decision-makers made it correctly merely by accident. Not a single person in 2017 was cleverly predicting the insane knock-on effects of COVID with respect to commercial real estate prices, over-hiring, or the subsequent layoffs. But it's not at all clear it was correct. Amazon originally said they planned to hire 25,000 people over 10 years. The article says they already hired 8,000 people and are pausing some expansion of construction on one of two sites. They currently have capacity built for 14,000 people. As the article mentions, they are still ahead of their original schedule, despite everything that's happened since then. That doesn't seem like a very big deal and still a big net win for jobs in the area. The people shitting on woke New York for fumbling the ball are still substantially right: DC is getting those jobs and NYC is not.
- bkjelden 4y agoHard to imagine that the US is not massively over-supplied with office space right now, given that some double digit percentage of workers will never go back to an office. Every office space construction project right now is either paused or being driven forward by the sunk cost fallacy.
- davidkuennen 4y agoI was in New York last week and couldn't believe how much office space is just completely deserted when looking out of my hotel window.
- paxys 4y agoStill the most expensive office space in the country (https://www.timeout.com/newyork/news/manhattan-office-space-is-the-most-expensive-in-the-u-s-080822 https://www.timeout.com/newyork/news/manhattan-office-space-...). Even though there is significantly more vacancy in Manhattan today than pre-2020, rents have barely gone down.
- pradn 4y agoFrom what I hear, it's hard to reduce rents significantly as they're part of the financing arrangements with banks. Rents in general seems to be really sticky.
- marcosdumay 4y agoCommercial spaces have this huge disconnect between occupancy and utilization. Just because nobody is there, it doesn't mean it's not occupied. And rents only ever fall when occupancy stays low for long periods. So, well, wait a few more years before being surprised.
- reaperducer 4y agoHard to imagine that the US is not massively over-supplied with office space right now Easy to imagine, since it's been in every newspaper almost every single day for the last two years. Last i checked, SFO had something like 30% office occupancy rate. Where i live, landlords are paying the few remaining tenants in some skyscrapers to move into other skyscrapers to concentrate the remaining offices in fewer buildings so that the other towers can be shut down and mothballed, or turned into apartments.
- robswc 4y agoVirginia is awful (imo, as someone living there but moving ASAP) It seems to somehow have all the cons of any sort of area, without hardly any of the pros. The traffic is also consistently, comically bad. Everything feels so damn crowded because there is pretty much only one road to go North and South and everything was built seemingly 100 years ago. Not an area ever intended to house this many people. Also, you pay some of the highest prices in the country for housing. Not sure how people do it for so long.