Chief Minister Alf Cannan says the government is working with a developer over a project on North Quay in Douglas.
The owner of the Newson's site said they wouldn't invest in the Island anymore after being refused to demolish the shop - which lies in a conservation area.
In Tynwald, Mr Cannan was asked about the site by Central Douglas MHK Chris Thomas.
Mr Cannan said the government had spoken to the developer about the scheme:
Fuel price hit may last into winter, says government
The Chief Minister says the government must prepare for the winter when it comes to rising oil prices over the war in the Middle East.
Further temporary speed limits on TT course
There'll be more temporary speed limits and traffic lights on the TT course this week.
Western homes to be without water tomorrow
Homes in Peel may be without water during work tomorrow.
Co-Op ordered to hand over evidence in blind worker's tribunal
Manx Co-operative has been ordered to hand over documents, messages and CCTV footage to a woman who's claiming she was unfairly dismissed and suffered disability discrimination.
Who'll be getting meningitis vaccines?
An MHK has asked the Island's Cabinet Office Minister about meningitis vaccines.
New atlas shows dramatic fall in Island birth rate
Births on the Island have fallen by nearly 45 percent in 15 years.
Autocar lavishes praise on Island's roads
The Island's roads have been praised by a major motoring magazine as some of the best to drive in the British Isles.
Super Unleaded hits almost 165p a litre
A fuel company's revealed the scale of price rises motorists will be facing today.
