Why Amazon built HQ2 and how the Covid pandemic reshaped it

Six years ago, Amazon started a contest-style competition looking for where to build a second headquarters. The competition drew bids from 238 states, provinces and cities vying to be the next anchor for the nation’s dominant online retailer and second-largest private employer.

This week, Amazon formally opened the doors to the first part of its new East Coast headquarters, called HQ2, in Northern Virginia. The first phase, called Metropolitan Park, includes two 22-story office towers, which could house 14,000 of the 25,000 employees Amazon plans to employ in Arlington. Around 2,900 employees have already moved in, and Met Park will be occupied by 8,000 employees in the autumn.

Amazon built its headquarters in Seattle in 1994, in part because of the area’s deep pool of technical talent and the presence of Microsoft in nearby Redmond, Washington. The company’s Seattle campus now spans tens of millions of square feet across more than 40 office buildings, and the greater Puget Sound area is home to 65,000 corporate and technical Amazon employees.

It begs the question why Amazon, with its sprawling campus in Seattle and a growing real estate footprint globally, needed to build a second headquarters.

Around 2005, as Amazon’s business grew and its campus exploded in Seattle, founder and then-CEO Jeff Bezos began considering where the company should expand next.

At all-hands meetings, employees would ask Bezos “if we ever wanted to be in one place at a time,” John Schoettler, Amazon’s head of real estate, said in an interview.

“I think there was a romantic notion that we as a company would just be so big that we would all fit in one building,” Schoettler said. “[Bezos] had said, well, we have long-term leases, and when those leases come up, I’ll work with John and the real estate team and we’ll figure out what to do next.”

Initially, Bezos suggested that Amazon live around the Puget Sound area, but the conversation then turned to recreating the “neighborhood feel” of the Seattle campus elsewhere, Schoettler said.

“We could have gone out to the suburbs and we could have taken some farmland and knocked down some trees and we would have built a campus that would have been very inward looking,” he said. “They generally have a north or south entrance and an east or west exit. When you put yourself in the middle of the urban fabric and create a walkable neighborhood, an 18-hour district, you become very outward, and you become very much part of the community, and it was what we wanted.”

Holly Sullivan, Amazon’s vice president of economic development, said it would be more difficult for Amazon to create such an environment if it “scattered these employees around 15 other technology hubs or 17 other technology hubs around North America.”

“So what HQ2 has provided is the opportunity for that deeper collaboration and being part of a neighborhood,” Sullivan said.

Amazon’s highly publicized search for a second headquarters has faced some challenges. In 2018, Amazon announced that it would split HQ2 between New York’s Long Island City area and the Crystal City area in Arlington, Virginia. But after public and political outcry, Amazon canceled its plans to build a corporate campus in Long Island City.

The company’s arrival in Arlington has raised concerns about rising housing costs and relocation. The company said it has committed more than $1 billion to build and preserve affordable housing in the region.

Schoettler said Amazon intends to focus much of its future growth in Arlington and in Nashville, Tennessee, where the company’s logistics hub is based. It also plans to hire as many as 12,000 people in the Seattle suburb of Bellevue, he added.

“I don’t see us getting any bigger in Seattle at all,” Schoettler said. “I think we’re pretty much drained out there.”

HQ2 has some of the same features as Amazon’s campus in Seattle. There is a communal banana stand staffed by “banistas” and white boards on the walls of building elevators. Amazon has a dog-friendly atmosphere at its Seattle office, which carried over to Metropolitan Park, where there is a public dog park and a gallery wall featuring the dogs of Amazon employees. The towers feature plant-filled terraces and a rooftop apartment building that echoes the feel of “Spheres,” botanical garden-like workspaces that anchor Amazon’s Seattle office.

Amazon is opening HQ2 at an uncertain time for the company and the wider tech sector. Many of the biggest companies in the industry, including Amazon, have eliminated thousands of jobs and curbed spending after periods of slowing revenue growth and fears of a recession ahead.

Companies have also confronted questions about what work looks like in a post-pandemic environment. Many employees have become accustomed to working from home and have been reluctant to return to the office. Amazon last month began requiring corporate employees to work from the office at least three days a week, prompting pushback from some workers who prefer greater flexibility.

Amazon has adapted the design of HQ2 around the expectation that employees would not come into the office every day.

Shared workspaces are more common, and there is less assigned seating, Schoettler said. Employees may only be at a desk 30% of the day, with the rest of the time spent in conference rooms, or having informal coffee meetings with colleagues, he said.

“If we don’t get in that day, no one else will use the space,” Schoettler said. “And that way you can come in, the desk is open, and it hasn’t been personalized with family photos and that kind of thing. You can sit down and absolutely utilize the space, and then go out for the day.”

The shift to a hybrid working environment has also affected the further development of HQ2. Amazon said in March it had pushed out the groundbreaking PenPlace, the second phase of its Arlington campus. PenPlace is expected to include three 22-story office buildings, more than 100,000 square feet of retail space and a 350-foot-tall tower, called “The Helix,” that features outdoor walkways and indoor employee meeting areas surrounded by vegetation.

Amazon will observe how employees work in the two new Metropolitan Park buildings to inform how they design the offices at PenPlace, Schoettler said.

Amazon did not say when it expects to begin development of PenPlace, but it continues to move forward with the permitting and preconstruction process, Schoettler said.

“We just want to be very careful, as we’re just opening these buildings, to make sure we do it right,” Sullivan said. “These are big investments for us. We own these buildings, and we want to give them a long life.”