Had the dynamite exploded, the entire building would have been decimated and everyone inside would have been killed, according to an explosives expert who spoke with the Sydsvenskan newspaper.
Police believe the dynamite was to be transported further north.
Police also raided a building in Vellinge south of Malmö on Thursday. Several men were arrested suspected of possession explosives, all of them whom are connected to motorcycle gangs.
A total of five men were arrested for suspected involvement in the plot and will face a detention hearing on Sunday, reported local media.
They are being held on probable cause of breaking Sweden's laws against flammable and explosive materials.
Malmö has been hit by a number of explosions in recent months and police have suspected the existence of a stash connected to the 42-year-old. An acquaintance to the 42-year-old was was arrested in April after police found 90 detonators in his apartment in Malmö.
The raid on Thursday was carried out by special forces officers, members of the county police, and bomb technicians, under the leadership of the public prosecutor.