Building is all the rage at the southern end of Magdalen Road, Oxford. A house is being restored on one corner, and the Magdalen Arms pub is being revamped on the other. But it’s the building behind the Magdalen Arms that’s being transformed: £6.4m is being spent on a major upgrade of the Pegasus Theatre, of which some £3m is being spent on the building itself.

An array of prefab add-ons, housing rehearsal facilities and workshops, have already vanished behind the theatre. Draughty and unappealing, you might think nobody would miss them. But, Pegasus artistic director Euton Daley revealed that quite a few tears were shed when the bulldozers moved in. Now the outside walls of the state-of-the-art replacement facilities are rising under the watchful eye of project director Simon Daykin. Is this the sort of job, I asked him, that’s guaranteed to produce sleepless nights?

“When demolition started in January, we had 21 months available until the building is due to reopen in September 2010. Time has flown by. It will feel like tomorrow, no doubt about it: we have an astonishing amount to do in that time. I used to have sleepless nights, but not at the moment, because the site was extremely well surveyed in advance, and we have a fantastic team managing the building programme.

“The major challenge so far has been the existing building: we’ve kept the original structure of the auditorium — if it ain’t broke, don’t fix it, it’s a great space. But whilst it was well built, perhaps standards in the 1970s weren’t quite as high as they are now. So we had to carry out an enormous amount of remedial work, to make sure that the blessed thing doesn’t collapse. But against that, we’d made the decision to keep the flat roof of the old theatre, and we were all terribly nervous that it would be like soggy Weetabix under the outer covering. But it was as sound as a pound.”

Then there was the little matter of an electricity sub-station, located bang in the middle of the building site.

“We couldn’t have done a thing if it had remained where it was. But when you want to move a sub-station, particularly one that is working well, you pay for it!”

Meanwhile, all the Pegasus shows, youth theatre, and workshops continue full blast, fanned out across the city.

Co-ordinating everything from stage sizes, to seating capacities, to differing ticketing arrangements is the Pegasus’s Euton Daley.

“I think the biggest surprise has been the willingness of the venues to not only let us put on shows, but also embrace some of the ways we work,” Euton told me. “For instance, a lot of the volunteers who do our ushering are young people, and they are being welcomed, rather than the venues insisting on doing everything themselves.”

With three of the venues involved — North Wall, the O2 Academy, and the Burton Taylor Studio — tickets can either be booked through the venue involved, or through the Pegasus’s box office. But online and phone bookings for the fourth, the OFS Studio, have to go through Ticketmaster, which charges a fee.

“It’s unfortunate, but we have to accept it,” Euton explained. “The OFS Studio is run by a national chain, and everything goes through their centralised system. It’ll be better if you turn up, rather than trying to book online.”

One of the new season Pegasus shows is being staged by a theatre company long based in Oxford — but, amazingly, its work has never been seen here before. CIAO! presents children’s theatre productions from across Europe, and they are bringing in a Danish show called Anima — described in advance publicity as “surprising”. In what way surprising, I asked CIAO!’s artistic director Karen Draisey.

“In Denmark, I think work for children is often a lot more visually interesting than work that’s produced here. The combination of puppetry, live performance, music, and technical genius combine to create a show that is very surprising in style.”

And Karen should know, for she spends much time travelling out from her Oxford home, talent spotting. What does she look for?

“I like theatre that grabs you from the start, as it must if it’s going to win you over. I’m looking for work that really has something special about it, and I can usually tell that very quickly.”

The Pegasus Theatre’s autumn season begins on October 3. Full details online at pegasustheatre.org.uk or by phoning 01865 792209.