Walgreens to return to New York's Times Square

By Ilaina Jonas

NEW YORK (Reuters) - Walgreens will be spending New Year's Eve in Times Square starting next year, with the likes of Chevrolet, Yahoo, and News Corp.

The national drug store chain has signed a 20-year lease to rent out almost all the interior of One Times Square, the skinny tower that holds up some of the world's most photographed and televised eye-popping billboards that light up the night.

"It really is one of the most visible branding locations in the country," said Jeffrey Katz, president and chief executive of Sherwood Equities Inc., a minority owner that manages the building. "It's the epicenter of Times Square. It's where the ball drops every New Year's Eve."

The base of the building has been without a permanent occupant since 2001, when Time Warner Inc, then AOL Time Warner, closed down its U.S.-based Warner Bros. Studio Stores. In 2003 it served as the set for the campaign headquarters in the remake of the film "The Manchurian Candidate."

Its landlords, Sherwood and German investment firm Jamestown Properties, could afford to take their time finding the right tenant because the media company's lease extended until 2009.

Six years, three brokers, and two almost-deals later, the space has a tenant.

"We wanted someone who would activate the base of the building and take advantage of the branding opportunity," Jeffrey Ackemann, Jamestown managing director, said. "We knew it would take a long time to find the perfect tenant, and we feel like we did."

The value of the building is not in the occupancy. In fact, the $20 million-plus rent from its 19 signs dwarfs Walgreens' rent for the inside.