TONY Graham is pointing out of his riverside window. The gleaming [GBP]13m home for his Unicorn Theatre Company, the UK's first purpose-built theatre for children, has just opened on London's Bankside, just along from Shakespeare's Globe. And guess what? The alleyway running beside the new building is actually called, and has been for centuries, "Unicorn Passage".

It's not entirely coincidental, as it turns out. Graham lets slip that he explored more than 100 sites in London before alighting on Southwark because of its accessibility.

However, the academic-looking, softly-spoken Graham could hardly have picked a more thriving London environment. In the past few years, the southern bank of the Thames, between Waterloo and TowerBridges has become what could be claimed as London's most vibrant cultural landscape. There are the National Theatre and Tate Modern vying for attention - even as another small venue grabs the headlines (the neighbouring Menier Chocolate Factory has just won the Evening Standard's Best Newcomer award) - with the Young Vic and South Bank concert halls. All are having multi-millionpound revamps. Tate Modern's head, Nick Serota, invited Graham to a recent meeting of south-bank arts chiefs and added his own hyperbolic welcome, describing Unicorn as "the latest pearl in our string".

Graham smiles a little wearily. It's been hectic putting the finishing touches to his new baby and the launch week, as always, has not been without its glitches. During the afternoon performance last week of his own award-winning production of Philippa Pearce's novel, Tom's Midnight Garden, someone in the basement set off the fire alarm, resulting in the evacuation of press and hundreds of schoolchildren. It wasn't exactly the way to win friends and influence people, especially since, as a group, at least in England, the national press is notoriously unsupportive when it comes to giving media profile for theatre for children.

Graham's Scottish experience as artistic director from 1992 to 1997 with TAG, Glasgow's Citizens' Theatre's youth arm, showed him there was at least one place in the British Isles where work for young people was being taken seriously.

"When I arrived in Scotland, I had this fantastic sense of release. There wasn't a lot happening. So there was no dogma, no sense of 'this is the way it's got to be done'. We could just get on and do what we wanted to do. Anything was possible. Giles [Havergal] believed in the work and if we wanted to start taking our work abroad, to international festivals, there was no reason why we shouldn't."

Indeed, Graham puts the growth and current energy of children and young people's theatre in Scotland very much down to the impact of its own International Children's Festival. Describing developments since the mid-1990s as "the NewWave", he believes that companies such as Visible Fictions, Catherine Wheels and Wee Stories all emerged on the back of the festival's influence and the European work it showcased. "It's fascinating, " he says, "how a festival could have such a transforming effect on local practitioners."

Graham is clearly keen to continue in like vein, looking towards Europe, sharing information and forging partnerships with other theatres such as the MacRobert in Stirling and the newly-opened Egg in Bath. Already planned up to 2007, Graham's programme has a decidedly eclectic feel to it. Its first year includes adaptations of children's novels by Unicorn associate director Carl Miller, Molecule Theatre's exploration of Antarctica, a new musical play by Bryony Lavery, directed by Unicorn's other associate director, Rebecca Gatward, as well as a visit from Italian company, Teatro Delle Briciole and, in May, Wee Stories' adaptation of Robert Louis Stevenson's Treasure Island. Catherine Wheels'newversion of Cyrano - "road-tested in Belgium", says Graham with unabashed enthusiasm bred of his admiration for Belgian companies such as the brilliant Laika - is due in 2007, when Havergal will make

his directorial debut at the new Unicorn. All of which, one suspects, would make Unicorn's founder, the irrepressible Caryl Jenner, purr, even if her dream has taken 58 years to come to fruition. The last six were particularly nerve-wracking. "When I arrived in 1997, Unicorn was in the red and on the brink of closure, " says Graham.

The miracle is not only the rebirth of the Unicorn and architect Keith Williams's bright new building with its two auditoriums, education centre, rehearsal rooms and cafe, but the raising of [GBP]8m for an art form so consistently undervalued. (The Arts Council of England gave [GBP]5m. )With its natural light and welcoming ambience, it also represents the culmination of a unique, three-year consultation with local school children to identify what they wanted. If their dictum that "the floors should be made of chocolate"has not been fulfilled, something as intriguing has been created by installation artist David Cotterell, who had to go through audition by children to secure his commission.

As you enter the theatre, below the entrance hall glass floor, you find yourself gazing at skyscrapers, towers, as if through ripples of water. It is the skyline, says Cotterell, seen from within the River Thames. Enlarged, interactive keys tempt the watcher to press and Enter. It is a live trompe l'oeil, visual fantasy and if Graham has his way - he's already looking five years ahead to hosting the next gathering of international ASSITEJ, the world-wide youth theatre association, and hoping eventually to create his own permanent ensemble - this is only the beginning of potentially the most exciting phase in the history of British theatre's poor relation.

Mind you, he'll have his work cut out. In London, Nick Hytner's National Theatre and the Young Vic have both raised the bar as far as theatre for children is concerned. Graham himself, quietly confident, believes he's on the threshhold of something big. "There's a newmaturity and status. Now all we need is the recognition."