Iraqitect: Pink Floyd, David Bowie, the Doors, the Rolling Stones and Oh! Calcutta: all part of the history of London’s revamped Roundhouse.

There’s nothing the world of alternative theatre and music loves more than a “found space” – not a purpose-designed theatre or concert hall, but some old factory or garage or warehouse, the flakier the better. A bit of light conversion and there you have it – an instantly atmospheric, dirt cheap performance venue. But what happens when these happy discoveries grow old?

You get what has just happened at London’s famous Roundhouse at Chalk Farm, a mid-Victorian railway engine shed turned gin warehouse which became a focus for rock music (from Prog to Punk) and new theatre from the mid 1960s to the early 1980s. Now it has had £30m spent on it, which means it is no longer a found space but something of a permanent institution. It has become a designed object. Luckily, its character has come through intact.

Architect John McAslan urges me up ladders and catwalks towards the circular rooflight of this spectacular space. “Keep walking!” he shouts. “Straight across to the middle!” At this point I freeze because the final few yards involve crossing space on a springy open wire mesh. It takes me five minutes to summon up the courage to make the walk, and another five before I can bear to look down. It is a very long way to the floor. The conical-roofed Roundhouse, originally built for steam locomotives, is big – even with today’s regulations it can take 3,000 standing or 1700 seated. Its familiar delicate cast-iron structure and timber-lined roof is still present and correct. What’s new is an upper gallery running all the way round (a true circle) and the daylight. The place was blacked out for a century or more, and can be now, but the skylights offer a new dimension. The shafts of sunlight turn the circular room into a Spielbergian spaceship.

This is where playwright Arnold Wesker founded his socialist “Centre 42” in 1964 with its motto of “arts for everyone”. This is where the Doors played their only UK gig. It was also home to acts including Pink Floyd, the Rolling Stones, the Who, David Bowie, Elton John and T. Rex. This is where director Thelma Holt set up a London theatre-in-the-round. To which Adrian Noble brought a memorable Manchester Royal Exchange production of Webster’s Duchess of Malfi in 1981, complete with Bob Hoskins and Helen Mirren.

But the Roundhouse closed two years later, and has been open only sporadically since. Its rebirth has been a ten-year labour by Torquil Norman, a very tall retired business troubleshooter who made a fortune out of a company called Bluebird Toys. Norman the Gangly Giant was responsible for the tiny, obsessively detailed, doll’s world of Polly Pocket. Never underestimate the power of toys: Polly, once a fat slice of her profits had been put into a charitable trust, turned out to be the salvation of the Roundhouse.

Norman is a capitalist with a social conscience. He believes in Wesker and art for all. He bought the Roundhouse for £3m in 1996 not so much to be a theatre – though it is obviously that – but as a ”creative centre” for London’s disadvantaged youth. Below the huge floor of the main theatre is a warren of catacomb-like brick vaults, originally designed to take the weight of the locos on their radiating tracks above. Norman and McAslan have judiciously cut into these spaces, taking out half of the walls to make studios for writing, performing, music-making, TV, film editing and suchlike. There is also a 220-person black-box studio theatre down there. All told, it is an extraordinary resource that, Norman estimates, will build up to a point where 10,000 youngsters a year are using it.

“I didn’t do this because I had ambitions to be an impresario, or to save the building, though I always loved it,” says Norman. “My motivation is very simple – my generation has treated this generation very badly. When John Major started selling off school playing fields, that was more of a piece of vandalism than anything these kids might do. And if you were no good at exams, your top chance was a job at the check-out counter at Safeway. This shows that you can work with young people off the streets and give them the opportunity and the equipment to create projects.”

So Norman will devote three months a year to big income-generating events in the main theatre space to help fund this admirably Victorian philanthropic enterprise. The rest of us probably won’t notice, since McAslan has designed the building in such a way that its two functions can be separated or combined as necessary. His big move is to leave the old building intact and to put most of the new stuff – offices, bars and cafes and lavatories, air-handling plant, the studio theatre – in a new, plainly modern building to one side, which curves to follow the radius of the mother ship. The new building is pulled away from the old one, joined only by a glass-roofed staircase and linking bridges. In fact the architecture of the Roundhouse is revealed more than it used to be, since an embankment that used to butt up against it has been cut away to make space for the new building. This now becomes the main entrance and illuminated signboard for the place, with an Anthony Gormley figure to be perched on top.

The big opening on June 2 brings back the De La Guarda company from Argentina, responsible for the old Roundhouse’s longest-running hit in 1999. I’m delighted to see that their new show, Fuerzabruta or Brute Force, “contains loud music and moderate nudity”, which shows a keen awareness of the place’s history: Ken Tynan’s infamous nude revue Oh Calcutta started off here in 1970.

Text © Hugh Pearman. Photos courtesy John McAslan Architects. First published in The Sunday Times, May 28 2006, as “Back on the circuit”.