A man in his twenties was arrested on Thursday while police quizzed him about the fire in the Hisingen area of Gothenburg in western Sweden. A second man was also detained later in the day.
“It is the ongoing investigation and more interrogations of witnesses that have led to the second arrest,” police spokesman Peter Adlersson told Swedish newswire TT.
Around 40 firefighters from five different stations battled the inferno, which started early on Thursday morning, for several hours before they got it under control just before 7am.
READ MORE: Fire ravages Gothenburg retail park
The blaze is believed to have started after a total of five cars were set on fire earlier in the evening.
Seven business premises were affected by the suspected arson attack, which completely gutted the building, but no one was injured.
Police apprehended a man shortly after the incident after a witness saw him running from the scene. Regional media reported on Friday that he had a series of previous convictions, including theft, assault and vandalism.
According to Swedish law the prosecutor has to decide by Sunday whether or not to remand the duo in custody.
Sweden's second biggest city has experienced a wave of violence in the past year, including several fatal shootings, although police have yet to link Thursday's blaze to any previous incidents.