The marriage of a former 19th Century alcohol and tobacco factory to apair of elemental concrete buildings - one charcoal grey, one white - rising from a volcanic plateau in a mid-Atlantic archipelago, this is an arts centre like no other.

It’s a beautiful place, not just for new Portuguese initiatives in art, film, theatre and architecture 900 miles from Lisbon, but a structure of real profundity - thoughtfully crafted, meticulously planned and subtle in its plays of daylight and shadow.

The old factory where sweet potatoes and beetroot were once conjured into alcohol was long a local landmark in Ribeira Grande, a town facing the Atlantic on São Miguel, the largest island of the Azores archipelago. Built of volcanic rock, it belonged to the surrounding landscape, as much geology as building. The architects of the new arts centre have recognised this in the low-lying design, construction and materials they have added here.

It is impressive to witness the ways in which the interiors of both newand renovated spaces echo the solid construction of the old factory. New spaces feel substantial and special, as if hewn from solid stone and lit by windows with deep reveals among other near-numinous slits, chutes and shafts of daylight. Equally memorable is the fact that this is a cluster or street scape of buildings rather than a single, hermetic structure, with new public spaces and alleys hidden between, and sudden, unexpected views inside and even right through them.

Menos é Mais and João Mendes Ribeiro share a history of converting seemingly unlikely industrial structures into arts buildings. They transformed the brutalist concrete power station of Coimbra University, for example, into a notably fine photography center and converted a new factory-warehouse in Coimbra into a temporary gallery for an Andy Warhol exhibition before the machinery and fork-lift trucks moved in. Famously, Warhol named his New York studio ‘The Factory’.

It takes real skill, ingenuity and empathy to imbue such seemingly unpromising spaces and places into architecture that not only works well forfresh purpose and new function, but also stirs the spirit. Cristina Guedes and Francisco Vieira de Campos say they aim for an architecture “of serenity with a timeless sense of objectivity and craft”. With the help of João Mendes Ribeiro, they have achieved that in the midst of the Atlantic Ocean.