A fire that destroyed an historic Saint John building on Wednesday was deliberately set and charges are expected, say police.

The fire started in an abandoned building on Charlotte Street about 3 a.m. and spread to the old Lyric Theatre building.

The old theatre, which was built in the late 1800s, sustained significant damage, was unstable and had to be torn down, along with the adjacent building from the same era.

The fire was deliberately set, Sgt. Dave Brooker of the major crime unit stated in a news release.

Two men, aged 19 and 20, are expected to face charges in provincial court on Thursday.

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Dozens of people gathered to take photos of the building before it's razed. (Connell Smith/CBC)

The investigation continues and a further arrest is expected, said Brooker.

Dozens of people gathered to take photographs of the once-grand silent film theatre and watch as it was demolished Wednesday afternoon.

An excavator arrived around noon and a few nudges were all it took for the old, blackened bricks to come crashing down.

The three-storey brick building and the smaller adjacent one, which used to be an appliance store, were expected to be razed by the end of the day.

Firefighters remained on the scene to ensure any remaining fire in the debris was extinguished.

About 30 residents of adjacent buildings, including the Lantern House on Princess Street, were asked to leave their homes, according to Saint John police. There is no word on when they will be allowed to return.

Traffic continued to be re-routed around the intersection of Charlotte and Princess streets.

There are no reports of injuries.

David Burke, who lives in a seniors' building across the street, told CBC News he awoke to the smell of smoke and then headed outside.

"I couldn't see more than three feet in front of me, the smoke was that bad," he said. "And it was rolling straight up Charlotte. I looked above me and the old appliance store over my shoulder was on fire."

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A car is covered in foam after firefighters spent hours putting out the fire on Charlotte Street in Saint John. (Connell Smith/CBC)

Officials believe the fire started in that appliance store, tucked beside Trinity Anglican Church at 127 Charlotte St., and then spread to the old theatre at the corner of Princess Street, which housed Korner Grocery on the ground floor.

Dozens of firefighters fought to contain the blaze, with a steady stream of water and foam rushing down the uptown streets.

"It's burnt out a lot of the structure, especially in the top floor of the building, including the roof," said District Fire Chief Eric Garland. "So now we're being very careful in regard to a possible wall collapse or anything like that.

"It's not safe out on the street around it or anything, that's why we're keeping people back. Fire crews themselves are proceeding with caution," he said before the decision was made to demolish the building.

The Canadian Red Cross was called to the scene to offer assistance to people affected by the fire.

Power has been out in many areas surrounding the fire.

Designated Local Historic Place

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The buiding sustained significant damage and was deemed unsafe. (Connell Smith/CBC)

To some people, the old Lyric Theatre was just a boarded-up, abandoned building attached to a convenience store.

But local historian Harold Wright says the city has lost of piece of its history and fears the space will become another parking lot.

The building, located at 131-141 Charlotte St., in the city's Trinity Royal heritage district, was a designated Local Historic Place.

"My heart sank," said Wright. "This is, to me, probably one of the top five greatest losses in terms of architectural heritage buildings."

It was built right after the Great Fire of 1877, which leveled about two-thirds of the city. More than 1,600 homes were destroyed and some 1,500 commercial and industrial buildings were also razed.

Dr. Edgar Berryman, who supported the arts, built the structure as a stage theatre, known as Berryman’s Hall, said Wright.

It had a grand staircase that was heavily embossed, tin walls, cast iron columns and decorative light fixtures, he said.

In 1910, it became a silent movie theatre, called Lyric Theatre, which operated until 1920.

The ground level of the building subsequently became the home of a restaurant, followed by drug stores, convenience stores, furniture stores and accounting offices, Wright said. It was also a Full Gospel Tabernacle.

But the two upper levels had remained intact as a theatre, he said.

John Cail was part of a theater group that re-opened the space in the late 1970s. There were hundreds of performances over several years, he said.

The audience space reached up two stories with a horse-shoe shaped balcony.

"It's quite a loss for us."