02/03/2017 7:27 AM AEDT | Updated 02/03/2017 7:38 PM AEDT

Police Arrest Man Over Suspicious Melbourne Factory Fire That Killed Three

Witnesses reportedly heard screams coming from inside the building.

Fairfax /Justin McManus
Arson chemists are conducting investigations.

Victoria Police have arrested a 52-year-old man in relation to a suspicious fire that broke out in an abandoned factory in Footscray in Melbourne's inner-west on Wednesday night, killing three.

The man was arrested in the Melbourne CBD on Thursday and remains in custody assisting investigators with their enquiries, according to a statement released by authorities.

Emergency services were called to the rear of the Footscray factory just after 11.30pm on Wednesday night following reports of a fire and explosions.

The Metropolitan Fire Brigade was able to extinguish the fire and contain it to a single room within about 40 minutes.

However, the bodies of three people, all yet to be identified, were located inside a room at the rear of the factory.

A petrol can has been pictured at the scene as arson chemists conduct further examinations.

The building, which is believed to be the former Kinnears rope factory, occupies a site which has previously been identified as a redevelopment space.

Police have also confirmed Arson and Explosives Squad detectives are investigating the deaths.

A proposal was put forward for construction on the site at a Maribyrnong Council meeting on Tuesday night.

Residents told the Nine Network that they had heard screams coming from inside the building as it went up in flames.

"I heard some screaming but I was not sure who was screaming," witness Muhammad told reporters.

"Then I saw the fire and I saw the front person was throwing water from the back but the fire was so large they couldn't control it."

Nine News has also reported that it is believed squatters were frequently seen at the factory and often chained themselves in at night.