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The proposed developer of the former bus station site in Lord Street, Douglas has been given until next month to move the scheme forward.
Askett Hawk has been told the Manx government wants a definite indication by then that the plans are going somewhere.
Infrastructure Minister Phil Gawne told Tynwald that to date the scheme had cost the government over £270,000 - money which might be seen as wasted, if the company pulled out of the agreement.
He said his department got in touch with the firm last month:
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