A 51-year-old man has been arrested on suspicion of arson with intent to endanger life following a fire at a busy LGBT+ nightclub in Milton Keynes.

Revellers were evacuated from Pink Punters on Watling Street in Fenny Stratford in the early hours of Sunday as flames rapidly spread through the venue. Thames Valley Police confirmed that the man, from Milton Keynes, remains in custody and urged the public not to speculate about a possible motive. No injuries have been reported.

Eyewitness Molly Firman described the moment staff and security began shouting for everyone to leave. "Out of nowhere, all staff and security were screaming, 'you need to get out now'," she said. "It just didn't seem real in the moment. Am I dreaming this? Is it actually happening? Before you knew it, it was just intense."

Firman, from Clophill in Bedfordshire, was with friends when she saw the flames. She said the night had been "normal" until just after 2am, when the fire alarm sounded. "It wasn't a small fire," she added. "But that fire expanded greatly."

Frank McMahon, whose family has owned Pink Punters for 36 years, said he was "heartbroken". In a statement, he said: "Whilst I am devastated to say that the building itself has been completely destroyed, I am deeply relieved, grateful and proud to confirm that no staff or customers were harmed, and everybody went home safely."

He praised fire crews, staff, and customers for their quick actions, adding: "Pink Punters has always been about people, not just bricks and mortar. The building may be gone, but the family, the memories, the spirit and the love remain. And let me say this clearly: Pink Punters will be back."

Firman described the blaze as a "surreal experience", with thousands of people watching from the roadside. "It's truly devastating to say the least," she said. "When I think of going on a night out, that's pretty much the only place I will think of going. If Pink's was not to be here anymore, I think it would affect a lot of people."

Buckinghamshire Fire and Rescue Service said it was called at 2.09am. At the height of the incident, 12 fire appliances were used. A spokesperson said crews were expected to remain at the scene for a "considerable amount of time", including to dampen down hotspots. Road closures are expected to stay in place for some time, police added.

Chief Superintendent Emma Baillie, commander for Milton Keynes, said people were evacuated "quickly and effectively". She added: "At this time it would be too early to comment on any particular motivation for this incident and we would respectfully ask for people not to speculate."

Aaron Harding, who has worked as a cleaner at the venue for the past five months, said he believes about 100 people are employed there. "I'm lost for words," he said. "I can't even imagine what the owners are feeling – what they're going through." He added: "The venue welcomes everyone no matter your gender, race, ethnicity, all of it. They are so welcoming and it is devastating."

Colin Ruggles, 61, who lives opposite Pink Punters, said he woke at 3am to the smell of smoke. "I opened up the lounge curtains just to be blasted with blue lights," he explained. "When I put my head out the window, what a devastating scene I came across. It's horrendous, so many people go to Pinks, so many people work at Pinks. The LGBT community are going to be devastated, where else can they go within Milton Keynes to feel safe?"

The Labour MP for Buckingham and Bletchley, Callum Anderson, said he was "deeply concerned" by the fire and said "whoever has been involved in this disgusting incident" should "feel the full force of the law". He added: "I will be asking my team to liaise closely with the police and with the venue's owners to ensure that all appropriate steps are being taken and that the community is properly supported."