No basements here in CA, but I looked for rooms that would work when we were house hunting. Turns out a bonus room over a 2+ car garage works perfectly too !
You know that moving in the equipment and seats before the theater is completed is a progress killer. Hard to finish, when you can go in there and just watch movies. It usually adds months to the build time.
I floated the idea of using the master bedroom as a theater...that went over like a fart in church
That wouldn't work in our house either.
Now all you have to do is build a whole bunch of panels. You will be sick of building panels when you are done, but it will transform the whole look of the theater.
I would build a whole bunch of panels and then start installing them at the front. That way you can get the screen in place and actually use the theater, if wanted. You can't go places right now, so getting it usable is what I would do. Because fastening panels is not a messy job and you can add them as you get several more built.