Delays with granting a building permit has kept the $3 million shopping and food precinct almost a month behind schedule.

Stage one, which includes the refurbishment of the existing building and development of the car park, was expected to be finished this month.

But failure to issue a building permit has caused major delays.

Spokesman Scott Whitford from SCK Investments said it was "frustrating" waiting for the building permit to be granted.

"We were expecting it months ago and we're still waiting," he said.

"It's frustrating for us and other people."

Mr Whitford said a local contractor had been used to clear the site, and Montdami Pty Ltd would carry out the building works once a building permit was issued.

He said as many local contractors would be used as possible on the Vincent St site.

Asbestos was removed from the building earlier this year.

Set to be an icon in Daylesford, the renovated Rex Theatre is expected to house between 20 and 22 tenancies.

Other facilities include four full size bowling lanes with a kitchen and seating area.

Patrons of The Rex will be able to park on top of the building entering from Duke St.

It will house world-class cafe Coffee Bean and Tea Leaf Cafe and mixed businesses.

Stage two is expected to be finished by the middle of next year.

Mr Whitford said the old theatre would retain the name The Rex.

The Rex Theatre ceased to operate in 1963. It screened many greats including Gunfight at the Ok Coral, Gone with the Wind, African Queen and Last Train from Gun Hill.