This isn't true (the urban sprawl part): while Tokyo is the largest metro area and does have a lot of sprawl, it's also continuously growing upwards, and not that much outwards because there really isn't much room left on the periphery (ocean and mountains are hard limits). Older, smaller buildings are regularly being knocked down and replaced by new, taller buildings.
This is of course true in American cities too, but zoning laws largely prevent new (and taller) housing construction close to the center, so they have no choice but to build outwards. In Japan, building upwards is much more feasible, only requiring that you acquire some desirable existing property first. (Of course, there are some limits to what you can build on it, but it's nothing like in the US so it's much easier to get approval to build some nicer and/or bigger/taller.)