Tamil Nadu Finance Minister D Jayakumar told reporters that the building will be manually demolished within three days as it has no structural stability.
The demolition work will begin soon, he said.
Although the building could be demolished within seconds using modern technology, it could not be considered in view of the structure being located in a key commercial area in corporation limits, he said.
Fire and Rescue Services office said the fire has been put out now. However, as a precaution fire tenders have been stationed there.
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Tamil Nadu Revenue Minister R B Udhaya Kumar said a portion of the building collapsed today due to the heat produced by the blaze and the particular stretch had no supporting pillars and it looked like a conference hall.
He said a team, comprising top government officials and experts including one from the IIT Madras have begun assessing the fire ravaged building since morning.
Speaking to reporters after inspecting the structure, he said the next step for the government was to "remove the building without causing any disturbance to commercial and residential buildings in the vicinity."
Lauding fire fighters for putting out the fire risking their lives, he said there was no loss of life due to efforts including declaration of the area as out of bounds for public.
He said the mishap was a "lesson in safety" for all.
About violations in the building construction, the minister said corporation officials were scrutinising it.
Appropriate action will be initiated if warranted, he added.
On demolition work, a senior official said rubble will be deposited in the rear of the building creating a platform for the "jaw crusher," a machinery that will aide the demolition.
Secretary, TNRWA, B Kannan told PTI that the mishap proved yet again the acute need to ensure fire safey.
He said the petition was before the court and the government had sought time in the matter.