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:
Laxey campsite to get campervan improvements
Garff Commissioners are considering expanding campervan facilities at Laxey campsite.
Local authority: don't suffer in silence at Xmas
Commissioners in the south of the Island say you needn't suffer in silence if you're struggling financially this Christmas.
Government reminder over salt bins
Have you passed the salt without noticing?
Weather warning in place for high tides
A yellow weather warning remains in place until the early hours of tomorrow morning.
White Boys touring Island today
One of the Island's festive traditions will be out and about around the Island today.
Road closed after crash
Police say a road in the west of the Island will be closed until this evening.
Worries about fire pollution in Glen Maye
Commissioners in the west of the Island says they'll look into the pollution from coal fires and log burners.
UK businessman wants to hear about mobile signal at sea
Can you pick up a mobile signal in the middle of the Irish Sea?
