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:
Colby Glen path shut until next April
A popular footpath in the south of the Island will remain closed until next April.
If you Trick Or Treat, don't trouble the street!
If you're going trick or treating this Hop-tu-Naa, police are warning you not to get carried away.
German newspaper says hello from the Island - and Queen Victoria
A leading German newspaper is urging its readers to sample the delights of the Isle of Man.
Don't buy electric cars, says Manx salvage firm
A salvage company from the south of the Island has told people not to buy electric vehicles.
Aurora-watchers could be in for Friday treat!
Could the Isle of Man get a celestial lightshow to kick off the weekend?
Peel's pulsing UFO has people perplexed
Did you see the UFO off the Island's west coast last night?
Peel MHK raises future of former care home
The future of a former care home in Peel will be raised by one of the town's MHKs.
Netflix film about Patrick's greatest boxer out in November
One of the Island's most famous residents will be starring in his own Netflix documentary next month.
