In the context of stock-based urban development, urban public space renewal in China faces several obstacles: rigid statutory constraints, substantial implementation risks, and limited potential for value creation. Japan’s Park-PFI (Park Private Finance Initiative) system enhances institutional fl exibility through binary classifi cation and facility regulation, off ering a mature and practical model for addressing this dilemma. Using the Park-PFI project of Sakurajōbashi Bridge-Top Square in Okazaki City, Japan, as the research subject, this paper employs an in-depth case study methodology to explore how the project addresses unforeseen challenges such as project suspension and achieves the sustainability of public values through the synergy between institutional flexibility design and spatial flexibility strategies. The study reveals that, institutionally, the Park-PFI system implements a binary division of facility rights and responsibilities via “nested planning,” creating fl exible operational space within the existing legal framework. Spatially, the project separates the permanent “framework” (designated facilities) from the temporary “infi ll” (facilities eligible for public recruitment), laying a physical foundation for the incremental renewal of public space. This synergy mechanism, characterized by fl exible symbiosis and phased implementation across institutional and spatial dimensions, provides a referential practical paradigm for the sustainable renewal of urban public space.