Two twelve-year-olds were arrested as part of an arson investigation.
Emergency services were called to the fire which broke out on the ground floor of the former Gochers Laundry in Alma Street, Lancing.
Firefighters battled the flames for hours on Tuesday evening, as thick smoke was pouring out of the windows and doors and nearby residents were told to stay inside and avoid the area.
Detectives investigating the cause of the fire arrested two school-age boys on suspicion of arson with an intent to endanger life - and officers are asking anyone with information to contact them.
They have since been released on bail pending further enquiries.
A spokeswoman for West Sussex Fire and Rescue Service said: “On Tuesday June 4, at 6.47pm, we were called to reports of a fire involving a former business premises on Alma Street in Lancing.
“Joint Fire Control mobilised six fire engines and an aerial ladder platform to the scene.
"Upon arrival crews were confronted with a fire on the ground floor which was heavily smoke-logged. The road was closed to allow emergency service staff to work safely.
"Firefighters wearing breathing apparatus extinguished the fire using jets, hose reels and thermal imaging cameras.
"A joint investigation is now being carried out with Sussex Police to establish the cause of the fire.”
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It is not the first time the building has caught fire.
Emergency services were called to the site on November 24, 2019, and police also treated this as arson.
A planning application for it to be demolished and turned into eight homes was due to be decided at the start of the month.
A spokesman for Sussex Police said: "Two 12-year-old boys from Lancing were arrested on suspicion of arson with intent to endanger life. They have been released on bail, pending further enquiries.
"An investigation is ongoing."
Witnesses or anyone with any information is asked to contact police online or call 101 quoting serial 1199 of 04/06.
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