FAO Schwarz closes in on new Times Square location

An employee dressed as a toy soldier stands outside FAO Schwarz in New York, May 18, 2015.
Timothy A. Clary | AFP | Getty Images

The famous toy piano Tom Hanks dances on in "Big" may have found a new home, as the oldest toy company in the U.S., FAO Schwarz, is said to be wrapping up negotiations on a new Manhattan retail space, according to Commercial Observer.

Rising rent at its Fifth Avenue location had forced the Toys "R" Us-owned toy store to plan on closing its GM Building flagship in just a few weeks while the search continued for a new storefront. But sources cited by Commercial Observer say the toy maker plans on opening a new store in time for the 2016 Christmas season at Paramount Group's 1633 Broadway office tower, just a few blocks from the old location.

A Toys "R" Us spokeswoman confirmed plans to close the current Fifth Avenue location on July 15 as the company continues "to look for a potential new site in midtown Manhattan," she said. In regards to reports of closing in on a new retail location she would only say, "We have not signed a lease agreement for a new location."

FAO Schwarz has operated its 767 Fifth Ave., 64-000-square-foot store at the base of the General Motors Building for nearly 30 years, paying $4 million a year; new reports indicate its yearly rent has spiked above $15 million, according to Commercial Observer.

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Toys "R" US did not immediately return CNBC's request for comment, and a Paramount Group representative declined to comment.

The famed Toys "R" Us flagship Times Square location, which stretches 110,000 square feet and features a 60-foot indoor Ferris wheel, previously announced plans it would close as well after running into similar rent increases. A company spokeswoman told Commercial Observer no lease agreements have been signed to relocate either store as of yet.

Read the full Commercial Observer report.