The Kingston Arts Precinct is officially on the market as a "blank canvas", and the public space and arts component will be the first stage of the mixed-use development.
Developers will have until December 10 to put forward proposals based on the operating needs of arts organisations and including spaces for "at least" 800 cars, Chief Minister Andrew Barr said.
Would-be developers will have to demonstrate excellence in design and "creative thinking", Mr Barr said, before the proposals are whittled down to three by February.
The preferred developer is expected to be announced in mid-2016.
Mr Barr said arts organisations would benefit from co-location with existing ventures the Canberra Glassworks, Megalo Print Studio + Gallery, and the Old Bus Depot markets, with the opportunity for shared spaces, collaboration and expansion.
Economic Development director-general David Dawes said the precinct would complement rather than detract from existing arts venues and national institutions and help drive broader economic activity for the territory.
"If you've got more critical mass you can start promoting the city more broadly," he said.
"What we're really trying to do is create that experience … when there's another blockbuster event at the National Gallery ... we can work with those national institutions to promote this because it all comes down to visitation."
Mr Dawes said the 40,295 square-metre site was one of the largest and most significant on offer from the ACT government and the public realm and art spaces would be handed back to the territory.
He compared the site's potential to New Acton and the Realm precinct in Barton.
"Because there's a number of competing challenges within it we felt we needed to put a larger parcel of land to the market," he said.
Integrating the development among existing heritage buildings was one challenge, along with parking.
Mr Barr said he expected a mix of street-level and below ground car parking would be a revenue source underpinning the precinct's economic viability.
He wouldn't be drawn on when building was likely to begin at the site or what proportion of the site would be dedicated to the arts versus residences.
"Throughout the tender process we'll put in place a range of minimum requirements, but we have to balance this with the economics of the project," he said.
"[The timeframe] depends on the eagerness of the successful tenderer … [but] the appetite is there to get on with this as quickly as possible."
The expected settlement date on the land is June 1, 2018, according to the Land Development Agency's website.
The site's developer will also need to create a management plan and deliver the project within 10 years with minimum disruption to existing precinct activities, surrounding businesses and residents, Mr Barr said.
The director of the real estate agency selling the site, Ray White Commercial's Andrew Smith, said the staging of the project would be up to developers, but the "public realm and arts deliverables" would be in the first stages.
He expected a high level of interest from large development companies due to the excellent location, ability for developers to master plan, build in stages and the likely high demand for the end product.
"I'd expect most interest to come from local and national developers, with some international interest," he said.