A caveat was placed on the property in February due to a legal battle underway between the two companies, with developer Creative Holdings yet to strike a deal with Car Parks Super, the owner of the old Birchalls car park at 41-43 Paterson Street.

The City of Launceston council is attached to the creative precinct via its proposal to relocate the St John Street bus interchange, and to redevelop the Birchalls building, which it purchased last year for $8.8 million.

The council could compulsory acquire the site but mayor Albert van Zetten did not answer if it would or had plans to.

"Acquisition of the property is ongoing through a legal process. The council is currently awaiting the outcome of this process," he said.

"The council has legal agreements with this company to facilitate the construction of a bus interchange on the site, post-acquisition."

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The bus interchange must be completed by the end of 2022 as a condition of the council receiving a $10 million drought grant under the Building Better Regions Fund. The council also received a $6 million no interest loan from the state government for the project.

The state government could also compulsory acquire the site but State Growth Minister Michael Ferguson did not answer if it would intervene.

"The government is currently in caretaker mode and understands the property remains subject to a contract for sale between Car Parks Super and Creative Property Holdings. The state is not a party to this contract," he said.

"Through the Office of the Coordinator-General we have continued to engage with the Launceston city council, Creative Property Holdings and their financiers in relation to the Creative Precinct proposal, including a planned bus terminal.

"We remain enthusiastic of the potential of the proposal to transform Launceston and Northern Tasmania."

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