After a search to find a permanent theatre venue, the 69 Theatre Company took up residence in a temporary tent-like theatre in the disused Royal Exchange building in Manchester. In 1973, the artistic directors of the now renamed Royal Exchange Theatre Company, Braham Murray, Casper Wrede, Michael Elliott and James Maxwell, were joined by theatre designer Richard Negri. Negri developed his initial design ideas for a permanent theatre inside the vast hall whilst teaching at Wimbledon School of Art, where he created a series of scale models with his assistant Peter Bennion.

Negri was inspired by the structure of a rose, designing a theatre-in-the-round where the stage and the auditorium created one continuous form. The architects, Levitt Bernstein Associates, noted that "the beginning for us was a small paper and wire model sitting in the middle of a table with Richard Negri striding round it talking about the form of a rose." This model shows an initial concept for the theatre, with staircases surrounding the theatre and an intricate roof structure which lifts to reveal the seats and lighting.

Construction of the final design began in April 1975 and the theatre opened on 15 September 1976. Negri remained an artistic director of the company until 1983.