The blast was so powerful that the windows in the property opposite the building were blown out.
"It was not fire crackers that were used," according to a spokesperson at Malmö police.
According to police the explosive was probably placed at the outside of the property, which contained a store combined with a restaurant.
Police forensics have begun their inspection of the scene.
It remains unknown who could have been behind the attack.
An alarm call came in about the explosion at around 4.30am on Monday and according to police no people were injured.
Police confirmed that there is damage to the building as far up as the third floor in the eight story building where the explosion occurred.
"The glassed in balconies have been moved on the floor above the small convenience store where the explosion occurred," an eye witness said.
One person, who lives on the fourth floor, told of how he woke up when his bed moved as a result of the blast.
The store's security bars were thrown across the street in the explosion.
The area around Bennets väg has been cordoned off by police.