Big changes are afoot at 2nd Story Theatre, which has settled into the biggest expansion project since it was founded nearly a decade ago.

Officials from the non-profit theater company were expected to close on the Liberty Street School Tuesday, a month after voters approved the building's sale for $100,000 at Warren's Financial Town Meeting.

But perhaps bigger news, at least to the theatre-going public, is the company's current construction project.

Workers just completed demolition and are starting to build a second, smaller "downstage" theater in 2nd Story's 28 Market St. home. The new theater will seat about 70 people, half of the main theater upstairs, and will descend from where the first floor kitchen used to sit, down into the basement. If all goes as planned, 2nd Story will be ready to start a new run of plays in September, treasurer/director Lynne Collinson said.

The new space will give 2nd Story extra flexibility to produce plays that might not have the same drawing power of the elaborate productions housed in the upstairs, 150-seat theater. But there is still a need for them, she said.

"It's going to be an intimate venue," she said. "It will house plays that maybe would not attract the crowds needed to support the large space upstairs. But it will attract the diehard fans; some edgy plays, offbeat things."

Artistic director Ed Shea has not announced the inaugural season, but Ms. Collinson said that almost certainly, a play like "The Lyons" by Nicky Silver would be among them, if not now then in the future. The play, which primarily takes place in a hospital room, deals with the protagonist's cancer and its effect on his family, past and future.

2nd Story officials decided to expand in hopes of increasing revenue, she said, and the entire project was made possible by the purchase of the Liberty Street School.

Before the purchase, 2nd Story's sets were made in a basement workshop and because of height and space restrictions, had to be made in pieces and assembled into their final form upstairs. Buying Liberty Street — and turning it into 2nd Story's main workshop and rehearsal space — freed up a lot of space that can now be dedicated to the downstage theater.

"These projects went hand in hand," Ms. Collinson said. "We made the jump (to Liberty Street) to enhance our production values. It was cramped down in that basement; now it's going to be a beautiful space."