Are WeWork’s vacancy levels inching up downtown?

Could WeWork’s highly-touted occupancy levels be inching down in downtown?

The company has been offering a string of incentives, including 50 percent discounts for the first three months, on space to new members who sign on to four of its Lower Manhattan locations, at 25 Broadway, 85 Broad Street, 200 Broadway and 110 Wall Street, according to marketing materials seen by The Real Deal.

Other recent incentives include free upgrades to larger spaces and 25 percent discounts for the first six months.

While it wasn’t clear how long the discounts would last, the rent cuts point to higher-than-desired vacancy levels at some of the company’s locations downtown, where it’s been gobbling up space at a fast clip. While some of the offices, including the the Wall Street and Broad Street locations, have just opened in the past year, the 25 Broadway location was first leased by the company in 2013.

A spokesperson for WeWork, now valued at $16 billion after a fundraising round in March, said the discounts were a normal part of the company’s business strategy.

“It’s a tactical sales incentive to drive sales and it worked,” the spokesperson said, adding that the company was “pleased with the progress” it had made in leasing. The company declined to disclose those figures.

High occupancy levels have long been a key factor in WeWork’s appeal to investors. In a pitch deck revealed by Buzzfeed last year, the company boasted average occupancy levels of a whopping 99 percent. In the event of a downturn, it projected that occupancy would remain as high as 85 percent, which is the same figure reported by competitor Regus in a healthy market.

For locations that have been open at least six months, the average occupancy was 98 percent as of February, according to recent figures quoted by WeWork’s President Artie Minson.

The co-working giant, which has 30 New York offices, also projected to investors average monthly revenues per member of $630, or $599 in a downturn.

Critics have said that the company’s balance sheet is vulnerable to fluctuations in the venture capital markets for tech. If the scrappy start-ups that lease spaces in its locations can’t pull in venture capital cash, they will no longer be able to afford WeWork’s expensive office space. WeWork has countered by saying it’s leasing space to professionals outside of the tech field and is taking on larger tenants to mitigate risk.

The company is also diversifying into residential and recently debuted its first co-living space, at 110 Wall. Beds in one-to-four bedroom apartments rent at $1,375 per month and private rooms start at $2,000 per month.

A recent uptick in the available for subleased space in San Francisco had led to some speculation that the tech bubble is already showing some signs of bursting. Among the companies downsizing at WeWork locations is Mixpanel, a data analytics startup which reportedly laid off 18 people earlier this year. The company is based in one of WeWork’s San Francisco locations and has a WeWork office in New York.

The office vacancy rate for downtown hit 10.2 percent in the first quarter of 2016, compared to 9 percent overall vacancy in Manhattan, according to a recent report by Cushman & Wakefield.