Dive Brief:
- Amazon has paused construction on five office towers in Bellevue, Washington, and will hold off on plans for a sixth, following the announcement of a pullback in its warehouse development pipeline earlier this year, the company confirmed Friday.
- Earlier, Mike Kuntz, executive vice president at Turner Construction, the largest contractor in the country, confirmed to Construction Dive the e-commerce giant directed it to hold off on interior work at 555 Tower in Bellevue.
- In a statement, Amazon said changing work habits since the pandemic caused it to reassess its office plans."The pandemic has significantly changed the way people work," the company said. "It’s early days and like many companies, we’re still learning how these new habits may impact our office footprint."
Dive Insight:
Amazon said it would finish the exterior and shells of the following towers, as well as common areas, lobby floors and retail space, before pausing further construction:
- 555Tower, at 555 108th Street, a 42-story, 1 million-square-foot project being built by Vulcan Real Estate and leasing to Amazon. The company says it will complete the lower working floors through the 19th floor.
- The Artise, a 600,000-square-foot, 25 story building.
- Towers 2 and 3 at West Main, a three-building, half-block project developed by Vulcan Real Estate.
- The 43-story Tower 1 at Bellevue 600, the core of Amazon’s Bellevue office projects.
Amazon said it is putting a hold on building a second tower at Bellevue 600 for the time being. The firm said move doesn't affect its plans to bring more than 25,000 jobs to the city.
“Our offices are long-term investments and we want to make sure that we design them in a way that meets our employees’ needs in the future,” said John Schoettler, vice president of Amazon’s global real estate and facilities team. “As we continue to learn, we’re pausing construction to reevaluate the design of some of our projects in Bellevue.”
The company also delayed construction on its second office tower in Nashville, Tennessee, named Juno, in order to rethink spaces. The shell and core of the second tower is nearly finished, as well as the lobby, communal working areas and amenity spaces. The delay does not affect plans to create more than 5,000 jobs in Nashville, according to an Amazon spokesperson.
Amazon's pullback of office development follows it hitting the brakes on warehouse expansion earlier this year. In May, it announced it would shed at least 10 million square feet of warehouse space due to slow growth and a weak profit outlook that it attributed to overbuilding.
Amazon has delayed or abandoned other projects recently, as well, including a distribution center in Sioux Falls, South Dakota, a warehouse in Huntley, Illinois and an airport cargo center in Newark, New Jersey.
The office pullback comes as the impacts of historic inflation have impacted Amazon's core e-commerce business. Sales from its annual Prime Day, held this week, appeared to be limited to essentials and smaller purchases, sister site Retail Dive reported.
But Turner's Kuntz said the move may also be tied more directly to conditions in the office market in Bellevue. "I don’t look at that as a critical factor in weighing the entire [office] market across the country,” said Kuntz. “I look at them as an isolated spot where you were probably overbuilt to begin with.”
Amazon posted its slowest quarterly growth in years in April and signaled the slowdown may continue, according to its first quarter earnings.
