On a sunny summer weekday morning, employees of technology giant Amazon pour out of a subway station toward a pair of 22-story glass office towers across the Potomac River from Washington, D.C. Nearby are a two-year-old park, a dozen new apartment buildings and stores including a Peruvian sandwich shop, a café with fresh-baked pastries and a day care center for dogs.
The development that’s taken shape in the past few years surrounds Amazon’s second headquarters, in an area now known as National Landing that includes parts of Virginia’s Arlington County and city of Alexandria. Next door, a still-undeveloped dirt lot spans a city block, a symbol of what’s yet to come.
Amazon’s decision to create its new corporate campus, better known as HQ2, in Northern Virginia followed a national competition that generated much fanfare. In some ways, it has lived up to the hype that it would serve as a catalyst to accelerate transformation of the wider urban community, though the change has not unfolded as originally conceived.
Instead of creating an office colossus, Amazon’s progress has been more modest. But even the smaller version has had an outsized influence on the community around it, sparking a surge of residential development.
Since Amazon’s decision to move forward, about 4,200 new apartment units have popped up nearby. New parks, retail centers and commuter options have taken root, and a struggling underground shopping mall is destined for redevelopment, its stores currently shuttered.
All that development comes as Amazon itself has had to adjust its plans and put a prominent second phase on indefinite pause. The Seattle-based company, which once expressed high confidence in meeting its hiring goals, has since said it has only “moderate” confidence in doing so now.
“This thing is going to happen; it’s just going to take twice as long,” said Victor Hoskins, who was director of Arlington’s economic development agency when Amazon picked Northern Virginia from 238 proposals offered by communities.
A lot has happened since that selection in 2019, not the least of which was a worldwide pandemic that shifted work priorities and upset business plans globally. More recently, the advent of new commercial models for artificial intelligence are forcing tech giants like Amazon to reassess their futures once again. But as Amazon considers its options, the broader National Landing area continues to evolve, driven largely by JBG Smith, Amazon’s development partner and a major landowner in the area.
The HQ2 pause “has had no impact on our willingness to start other projects, to do multifamily, to do retail, to reposition office, to do anything else in the neighborhood,” JBG’s Chief Strategy Officer Evan Regan-Levine said in an interview.
Half the space, but much more
Amazon originally envisioned a campus that would be at least 4 million square feet. But work to date has produced only a total of 2.1 million square feet in two new buildings.
While its progress has been slowed, development has blossomed elsewhere in National Landing, an area south of the Pentagon and west of Ronald Reagan Washington National Airport. At least 24 commercial developments, parks and transportation upgrades have been completed, according to a development map published by the National Landing Business Improvement District, the economic development organization helping shape the neighborhood.
Another seven such projects are under construction, and 22 more are in the pipeline.
The 24 completed projects include the renovations of three office buildings and the construction of a new roughly 300,000-square-foot Virginia Tech innovation center with classrooms and a drone testing cage. The area also sports new eateries such as an outdoor food hall with more than eight vendors, an Alamo Drafthouse movie theater and a host of stores, grab-and-go coffee shops and sit-down restaurants.
It’s a rebirth of sorts for an area that was once home to a drab mix of government and contractor offices, warehouses and surface parking lots.
The area now bustles with a young, diverse and highly educated workforce, and more than 28,000 residents — about 1.4 workers for every resident, according to the BID’s 2025 market report. A sluggish single-family housing market has helped fill new apartment buildings almost as fast as they open.
“A lot of people in our district live near their work, and that’s one of the advantages,” said Tracy Sayegh Gabriel, the president and CEO of the National Landing BID.
Ridership at a local public transit site has steadily grown in the last few years toward pre-pandemic levels. Average weekday tapped entries at the Pentagon City Metro station — a roughly 10-minute walk from Amazon’s HQ2 — so far this year are more than 8,800, higher than the roughly 7,700 the year before, and about 6,100 the year before that, Metro data shows. Even on the weekends, entries at the transit location are on the rise. Metro ridership is also climbing at two other stations in National Landing, Crystal City and Potomac Yard.
Still, the office vacancy rate for the National Landing area stands at 23.3%, the BID’s report notes, a 14.2% year-over-year increase. It comes as the area, and the broader Washington market, see government and private-sector reductions in office usage butting up against return-to-office mandates, including by Amazon.
Leasing help
Filling that space is a chief challenge facing JBG Smith, the owner of about 5.6 million square feet of existing office space in National Landing. The vacancy numbers might be worse had Amazon not pitched in. In addition to its own two buildings in HQ2, the tech giant has leased space in a 14-story office tower, 1770 Crystal Drive, that JBG Smith redeveloped, a project it completed two quarters ahead of schedule.
Amazon also leases space at 241 S. 18th St. next door, according to JBG Smith’s Regan-Levin. In fact, at one point the tech company also took space at 1800 S. Bell St., 2345 Crystal Drive and 2100 Crystal Drive, reaching about 1 million feet, a total it’s tapered back since the first phase of HQ2 opened.
As of June 30, Amazon still leases about 357,000 square feet of offices in National Landing in addition to its own buildings, according to a July investor report from JBG.
In addition, Amazon’s arrival kicked off a spurt of residential development in the area that now includes new multifamily developments with names like Altaire, The Sage at National Landing and the Witmer.
The BID’s market snapshot notes that more than 1,700 residential units were added last year alone.
In some cases, Amazon provided direct assistance. Amazon Vice President Holly Sullivan said in a statement to CoStar News that the company has invested $1.2 billion to preserve and create more than 9,500 affordable housing units across the region and provided $239 million to more than 100 local nonprofits and schools.
Significant retail development also took root following Amazon’s decision to move to the area. Regulars or visitors to the area can grab dumplings from a French-Chinese fusion hot spot, ice cream from chain Van Leeuwen or coffee from Good Company Doughnuts & Cafe. About 55 new retailers in National Landing have tripled the number of street-level shops, including those that knit the blocks together along the north-south strip of Crystal Drive to create a neighborhood main street, Regan-Levine said.
At the end of 2023, JBG also completed the reimagined Water Park, a kind of public square featuring several outdoor grab-and-go food stalls. By next year, more than 20 retail establishments are expected to open, the BID said, building off the 2 million visitors it said came to National Landing in the first quarter of the year.
Plus, the neighborhood includes more than 5,500 hotel rooms, many of them already there because the location is close to Reagan National Airport.
Modest start
While National Landing has taken off, Amazon’s HQ2 expansion has been more modest.
The first phase, called Metropolitan Park, opened in mid-2023. It features a pair of 22-story towers named Jasper and Merlin that collectively encompass about 2.1 million square feet of office space.
There’s an additional 50,000 square feet of retail space for more than a dozen small businesses, an Amazon spokesperson said. Some of those ground-floor locations — Mae’s Market and Cafe, the restaurant Peruvian Brothers and the canine day care District Dogs — buzz with people and pets.
Shuffling into the Merlin building to escape the summer heat, Amazon employees and others are met by art installations such as the hanging sculpture “Cherry Smash,” made of recycled materials, that gives observers an impression of standing under one of Washington’s famous cherry trees.
The ground floor features a café open to the public, multiple event spaces that offer room for hundreds and an interactive visitor center where guests can learn about the company’s history, products and services through interactive screens where employees, partners and sellers recount personal stories.
Making their way upstairs, visitors hear impromptu conversations pop up at a coffee stop and in an atrium encircling a central staircase. There is a game room that offers billiards and table tennis, as well as an entire wall decorated with photos of employees’ dogs. An art studio, terraces with electric grills, and gardens that donate produce to a nonprofit are some of the other amenities.
While a few focus rooms meant for individuals are sprinkled throughout the building, the Amazon spokesperson said the company is prioritizing collaboration, including in team suites — with desks, couches and enclosed conversation space — that can be reserved to work on projects for a day or even a month.
The office tower and its sister building overlook roughly 2.5 acres of public space that feature walking paths, public art installations, a dog park, a children’s play area and a central green.
Second phase paused
Beyond Metropolitan Park, a second phase, known as PenPlace, has been halted.
After the proposal for the second phase of HQ2 was submitted in February 2021, the Arlington County Board approved it in April 2022. The plan laid out about 3.3 million square feet of commercial space, involving three 22-story office buildings and the roughly 392,000-square-foot “Helix,” an eye-catching biophilic office structure.
It also included an intention for roughly 94,300 square feet of ground-floor retail space across two of the office buildings as well as a trio of one- to two-story detached pavilions, a presentation showed. The third office building would host a roughly 14,600-square-foot child care center and a roughly 28,600-square-foot high school. Plans for the high school have now shifted to Met Park.
The approved proposal also contained a roughly 2.75-acre public open space.
In its original presentation to the county board, Amazon said it expected to begin construction on the second part of the project in mid-2022, with the first opening expected in 2026. But in early 2023, Amazon indefinitely paused construction on the second phase of HQ2, which the county cites as due to economic uncertainty.
There is not an update yet on when that pause might end. Meanwhile, the Arlington County Board approved an extension on the PenPlace site plan through June 30, 2028.
JBG’s Regan-Levine said PenPlace “will be great when it happens, but this has to be done the right way before they put a shovel in the ground,” noting that configuring utilization is a key driver for the delay as Amazon continues to critically think through what meets its needs.
Amazon lowers HQ2 job creation projection
As of this summer, Amazon is hiring at HQ2 for Amazon Web Services, its finance and global business services group, its legal division and its devices team.
But, Amazon said earlier this year, it no longer believes as strongly that it can meet a job growth goal at its second headquarters.
Under an agreement between Virginia and Amazon, in its first stage the company can receive up to $550 million for creating 25,000 jobs with an average wage of over $150,000 in Arlington. Amazon will receive this incentive — a rate of $22,000 per employee — only if it creates the forecast high-paying jobs.
Though the group previously indicated its confidence level was “high” about achieving that goal by the end of 2038, Amazon stated in April that the level is now “moderate,” according to reports submitted to the commonwealth.
The company reached 7,232 qualifying new jobs added to HQ2 between November 2018 and the end of last year, according to an annual form produced by Virginia Economic Development Partnership, an agency of the commonwealth.
The company says the cumulative number of all positions created between November 2018 and December 2024 is 8,331, but the difference between that number and what it filed for can be attributed to a combination of factors, including new hires assigned to HQ2 awaiting relocation; employees hired at HQ2 who temporarily moved during the pandemic; employees working at HQ2 who are living outside of the Washington metropolitan area; and employees reassigned from other Virginia locations.
It could earn another $200 million for a subsequent stage, at a lower rate per employee, if it creates an additional 12,850 new eligible jobs.
Amazon requested in its latest filing a payment of $6,446,000 for 293 jobs created and in place for the 2024 calendar year. These funds would be released in September 2029.
“While we experienced incremental new job growth in 2024, we exceeded hiring goals in previous years,” Amazon’s Sullivan wrote in the annual form. “Our second headquarters has always been and continues to be a long term investment, and we are proud of the progress we have made.”
AI effect
Amazon’s hiring plans remain uncertain.
Amazon’s CEO Andy Jassy in June acknowledged technologies like artificial intelligence will change the way the company’s work is done, leading to fewer jobs and employees shifting to other roles.
“It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce,” he said. Exactly if and how that will affect HQ2 remains to be seen.
Amid aftershocks from the pandemic, the company reduced the head count in Arlington by nearly 300 qualifying employees and therefore did not request a grant payment last year. But it did the year before for the first time since reaching an agreement with Virginia on HQ2, for nearly $153 million, which would be released in September 2026.
“Because the grants are paid post-performance, no clawback is necessary. Should the company officially cancel the project and not create additional jobs, the performance agreement would be canceled, and no additional funds would be released,” a spokesperson for Virginia Economic Development Partnership told CoStar News via email.
Meanwhile, Arlington County approved a tax grant in March 2019, valued at $23 million, based on an understanding that Amazon would occupy at least 6 million square feet of office space in the county over the subsequent 15 years. The pay-for-performance grant amount was calculated on the expected revenue Amazon would create from business-related travelers who would stay in Arlington.
A spokesperson for Arlington Economic Development told CoStar News via email in June that the county has paid no performance-based incentives to date.
What's ahead?
The BID said in its market report the residential, hotel and retail pipeline will continue to shift National Landing into a balanced urban center that can accommodate about 14,000 new residents and 17,000 new office workers over the next five to 10 years.
“There are over 10,000 units in the residential pipeline, representing under construction, planned or approved projects,” the report notes.
Projects under construction include residential towers Crystal House 3, 7 and 8 and a $146 million entrance to the Crystal City East Metro Station.
Many projects remain in the pipeline, such as the office building at 1800 S. Bell St. Proposed residential and hotel properties in the works include 1400 Richmond Highway, two buildings that make up 12th Street Landing; Crystal House 4, 5 and 6; Crystal Plaza; 223 S. 23rd St.; 2250 Crystal Drive; and the Crystal Drive Block W development at 2451 Crystal Drive.
There’s also 2100 Crystal Drive, a property JBG said is under contract to sell to a third-party developer, and 2200 Crystal Drive: Both received approval to take advantage of the county’s adaptive reuse process to transform empty office spaces. Regan-Levine said JBG is evaluating other offices in its portfolio in the area that could similarly use that process.
The pipeline also hold a new National Pentagon 9/11 Memorial Visitors Education Center, the $2.3 billion Long Bridge Project and the $57.2 million CC2DCA project to create a pedestrian bridge connection to Reagan airport.
Meanwhile, the Potomac Yard area that bookends the south of National Landing is still taking shape. A $2 billion public-private partnership to create a 9 million-square-foot district that would host an arena for both the Washington Capitals hockey team and Washington Wizards basketball team fell through after the professional sports brands’ owner Monumental Sports & Entertainment decided to stay in D.C.
Now JBG intends to develop apartments, townhouses and affordable housing units in part of Potomac Yard.
JBG Smith is no stranger to rethinking strategy as needed. After all, the Arlington neighborhood has been in a state a flux for decades, when federal tenants began downsizing and moving elsewhere.
“We always think about where could we do it next,” Regan-Levine said.