Gap taking over Toys R Us Times Square location

Gap (GPS) is officially signing the lease at the current Toys R Us flagship store in Times Square, CNBC learned on Friday. (Tweet this)

The company released the following official statement:

We're pleased to confirm our plans to construct our newest Gap and Old Navy flagship stores in one of one of the world's most well-known locations – Times Square. This signature spot builds on Gap's continued commitment to showcase its brands in ideal locations that best serve customers. Once complete in 2017, we're excited to see two of our iconic American brands welcome customers in the heart of New York City.

The lease is for the Bow Tie building, which is located at the intersection of Broadway and Seventh Avenue in the heart of Midtown Manhattan. The company told CNBC that the space is large enough to house both a Gap and an Old Navy, each with its own separate entrance. Both brands are owned by Gap.

Read More Goodbye, Times Square: Toys R Us leaving flagship

The company is still in the initial phases of the store design process, it said, and completion is expected for early 2017. Each of the stores will have about 31,000 square feet.

Last week, Gap CEO Art Peck did not confirm the lease but told CNBC, "We're looking at all good real estate, you know Times Square is the crossroads of the world. And that's an amazing location."

—CNBC's Courtney Reagan contributed the reporting for this story.