Liverpool-based economic development and regeneration consultants Amion has named Chester's former Odeon cinema as its preferred site for the city's new theatre.
In a report, Amion concluded that the Odeon offers much better value for money and that the risks associated with the other potential site, the Little Roodee, are "significantly greater".
The consultants also recommend that proposals to accommodate a visual arts centre or alternative cultural facility are developed as part of a cultural venue investment programme.
In September, Cheshire West & Chester Council said the choice of site for Chester's new theatre will be made on 13 October.
Cllr Stuart Parker, executive member for culture and recreation at the council, said: "The Executive will carefully consider all the information before them before making a recommendation that is vitally important to Chester's future as an international visitor centre. The process has, of necessity, been long and detailed – but at last we are on the verge of real progress."
Amion's 48-page report will be considered by Cheshire West & Chester Council's executive cabinet next Monday 10 October when members will make a recommendation to full council meeting three days later.
Amion, which has been working with the council on the regeneration of Ellesmere Port, has reviewed the costs, benefits, value for money and risks associated, with each of the council's two preferred sites.
A third option, the bus station/library site, put forward by Chester In Concert was rejected on the grounds that the "stand alone" development could compromise the viability of development of the remaining Northgate site.
The original theatre feasibility study, carried out by Locum in July last year, estimated capital costs of £50.4m for the Roodee and £38.2m for the Odeon.
With the additional costs relating to building costs inflation, highways improvement, acquisition and securing vacant possession, Amion estimate a rise to £56.76m for the Little Roodee and £42.9m for the Odeon.
The report said both offer "broadly similar" quantified and wider benefits; 133 full-time equivalent jobs and £4.1m in gross value added. Both also are forecast to have an annual operating deficit of £933,000.
The report added: "In addition, it will result in substantial user and non-user benefits, with the latter expected to include increased investment in nearby areas.
"The creation of a landmark building on the Little Roodee site could create a significant regional and national profile. Conversely, the Odeon site may have a more immediate impact within the core of the city centre."
Amion assess the risks associated with the Little Roodee as "significantly higher" than those attached to the Odeon site, in particular, now that the former Cinema has been acquired by the council for £2.6m from the previous owners, Barnsley-based Brook Group.
The report continued: "Amongst the key risks identified are funding, planning and heritage. The Little Roodee site is also considered to be much more likely to be subject to delays due to planning or other issues, such as archaeology.
"Based on the available evidence, the Odeon site is assessed to be the best option – offering better value for money than the Little Roodee, in particular due to its lower costs, and having a significantly lower risk profile, making it more deliverable."
The council is also seeking to pursue the option of a stand-alone convention centre in association with private sector interest.