Developer Larry Abdo doesn't mince words when it comes to describing his foray into musical theater last year with a production called "Funny Business."

"It was a critical and financial disaster," Abdo said recently. "I think one of the reviews described it as a 'must-miss.'"

But Abdo said the show, which ran for about six weeks at the Hennepin Stages theater, was useful in sparking a development plan for his Minneapolis firm, Anxon Inc.

Abdo said he learned that there's significant demand in the Twin Cities for short-term rental housing for people working in theatrical and musical productions and other cultural events. An informal survey by the Minneapolis-based Playwrights Center recently confirmed that view, finding that housing expenditures by performing artists visiting the area total about $4 million a year, according to Todd Boss, the group's director of external affairs.

Late in 2006, Anxon acquired a vacant building next to the Hennepin Stages; its ground floor once housed the Cafe di Napoli restaurant and its upper five floors once were a hotel. The hotel had been closed for years, and the cafe was relocating to the skyway level of a building Anxon owns at Sixth Street and Marquette Avenue.

Abdo said he's talking with some prospective restaurant operators about moving into renovated space on the vacant property's ground floor. Meanwhile, he's going ahead with plans to convert the other five floors to studio and one-bedroom apartments. Abdo said he hopes to work with area theaters and cultural organizations to market the apartments to visiting performing artists.

"It's a cool location," Abdo said of the building at 8th Street and Hennepin Avenue S., which, in addition to being next to the Hennepin Stages, is across the street from the State Theater and just a block from the Orpheum Theater. He said that when he was working on "Funny Business," he learned that some performers' contracts specify that they must be housed within a certain distance of a venue.

Abdo said he hopes that work on renovating the six-story building can begin early next summer and be finished late in 2008. Anxon paid about $3 million to buy it, and he estimates that renovation will cost another $3 million.

The renovation would be the latest in a long list of developments for Anxon; its other projects include 6 Quebec, a condominium and retail property in the building that now houses the Cafe di Napoli. Abdo said he also is having discussions with prospective tenants for a 12-story boutique office property he hopes to build at 10th Street and Marquette Avenue S.

Abdo said he and his brother, Minneapolis attorney Ken Abdo, also hope to bring another stage production to town someday despite their unsuccessful experience with "Funny Business."

"In spite of all that, it was a lot of fun," he said.

Susan Feyder • 612-673-1723