There were no injuries reported.
Mr Nicholl said the 30m by 20m building was still standing, but there was significant fire, smoke, and water damage inside.
Fire Safety were conducting an investigation into the cause of the fire, but at this stage it was not believed to be suspicious.
A council spokesperson said a dangerous building notice was issued yesterday, which meant the building could not be used for accommodation purposes.
Council has also started an investigation into whether the building had the necessary fire-rating and building consents which allowed it to be used for accommodation.
The findings of the fire service would form part of council's investigations.