Goodbye, Times Square: Toys R Us leaving flagship

Shoppers watching the ferris wheel at the Toys R Us store in New York City.
Scott Mlyn | CNBC

Toys R Us will not renew its lease for the 110,000-square-foot retail location in the Times Square area, according to Commercial Observer.

The flagship store, known for its 60-foot indoor Ferris wheel and life-sized animated T-Rex, will close its doors in February 2016, but not because of poor sales.

"Here's the long and the short of it," said Brad Mendelson, the Cushman & Wakefield broker who is marketing Toys R Us' space on behalf of landlord Charles Moss, to the Commercial Observer. "They have 21,000 square feet [on the ground floor]. There really is not a tenant that can rent that. The market has just escalated so."

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The current asking price for rent on the ground floor of the building is $2,500 per square foot, according to the report, which noted that Toys R Us paid half of that cost since it began paying rent in 2000. It is likely that the retail space will be parceled into smaller spaces to entice vendors.

"Toys R Us has been a proud resident of Times Square since our international flagship store opened there more than 10 years ago," a spokeswoman for Toys R Us told Commercial Observer.

"The lease for our store in Times Square expires in 2016 and, as previously noted, we have been reviewing our lease renewal options. We have not signed a lease agreement for a new location and any rumors regarding this ongoing process are just that."

Read the full report from Commercial Observer.