The ACT government will spend up to $78 million on development works for the Kingston Arts Precinct, after signing an agreement with Geocon to deliver the long-awaited project.
The money includes $50 million for purpose-built art facilities for resident art organisations and accommodation for visiting artists.
Minister for Urban Renewal Rachel Stephen-Smith said the next stage of community consultation would give arts organisations and the community the best possible chance to engage with the design process.
"The Kingston Arts Precinct will further add to the vibrancy of the Kingston Foreshore and the character of Kingston and Canberra more broadly.
"We'll continue to work with all stakeholders to ensure we deliver a precinct of the highest quality and with excellent design outcomes," Ms Stephen-Smith said.
A design briefing for key resident groups, art organisations and the precinct's architects, Fender Katsalidis, will be held in two weeks.
M16 gallery director Jas Hugonet said it was an "excellent opportunity to explore the notion of co-location with other arts organisations and work with architects on an arts precinct from the ground up".
"The ability to attract crowds and share the arts with local, national and international audiences is going to be awesome," he said.
Alexander Boynes, program manager at the Canberra Contemporary Arts Space, said the vision for the precinct was ambitious and would be the envy of the Australian art world.
"For the first time it will enable the Canberra Contemporary Art Space to exhibit work by leading local, national and international practitioners in a purpose-built facility of world-class standards," he said.
But the art space's move could see the Gorman House Arts Centre in Braddon and the Manuka Arts Centre both lose a significant tenant.
Canberra Glassworks chair David Whitney said the organisation welcomed the announcement of the precinct's next stage.
"We look forward to our sister arts organisations joining us in Kingston," he said.
The so-called key arts organisations involved in the negotiations signed confidentiality agreements to allow them to see preliminary design documents.
Those organisations are the Canberra Glassworks, Megalo, M16 Artspace, Craft ACT, Canberra Contemporary Artspace, PhotoAccess and ArtSound.
The Canberra Potters' Society pulled out of negotiations in July 2017, after deciding its premises at Watson served the needs of the organisation.
The ACT government announced Geocon as the successful tenderer for the site in 2017 but progress appeared to have stalled when negotiations dragged on two years after the announcement.
Construction was originally slated to start earlier this year but has been delayed by the extended negotiation process.
Conditional approval to demolish the heritage-listed switch room on the site will expire in October.
A spokeswoman for Ms Stephen-Smith said the building cannot be demolished until the Heritage Council has endorsed the design of a new building for the site.
"The switch room will continue to be used as artist accommodation until new accommodation is built as part of the precinct or alternative accommodation is agreed upon.
In February, the ACT government signalled it would establish a new arts management body for the precinct, with $1.8 million allocated in the 2018-19 Budget review.
The site has been earmarked for arts and culture uses since 1999.