Suspicious fire does $2m in damage to Melbourne shops

A suspicious fire has ripped through several businesses in Melbourne's famous Lygon st, causing more than $2 million damage.

The fire started at about 12.50am in a two story building which had been undergoing renovations for some time before spreading to a Japanese restaurant next door.

It took 60 firefighters more than an hour to get the blaze under control.

Witnesses heard explosions before the building was engulfed in flames. A wall has collapsed into a lane way and there are fears more of the structure could give way.

While no one was in any of the businesses at the time, Fifteen residents located nearby were evacuated while firefighters fought the blaze.

Melbourne Fire Brigade incident controller Costa Katsikis said traffic was being impacted by the blaze.

"We're working closely with Melbourne City Council, there is concern about a portion of wall that has collapsed," he said.

"We're looking at ways to make that safe."

The fire has been deemed suspicious, finvestigators will be on scene later this morning

City bound lanes of Lygon street remain closed.