The blaze tore through the Jewson builders’ yard in Moor Road, Hunslet, and destroyed the shop building as well as Â£1.4m in stock.
Locals reported hearing explosions and smelling gas as the fire took hold in the early hours of Sunday and about 30 nearby homes had to be evacuated.
It took 100 firefighters to bring the flames under control, with the fire also damaging a carriage at the nearby Middleton Railway visitor attraction.
One of those who had to leave their homes was 16-year-old Sophie Major, of Lake Terrace.
She said: "Whoever did it needs to be caught, 100 per cent, because they could have put all our lives in danger."
Neighbour Donna Atkinson, 42, added: "It is not just the business. It is people's homes. It is people's health."
Jewson general manager Phil Robinson said that despite the devastation, they would be back at work today.
He said the business, its vehicles and its 15 staff would be relocating to another Jewson site, in nearby Gibraltar Island Road, where they would carry on as best they could.
Mr Robinson said the lost stock was not just in the yard - where piles of timber now lie in blackened heaps - but in the fully-stocked shop.
This included painting and decorating supplies, windows and plastic drainage ducting.
Mr Robinson said the fire was so big that aeroplanes on their way to and from Leeds Bradford Airport had to be diverted from the flight path which ran overhead.
"Witnesses are saying there were three separate fires," he said.
"The building is going to have to come down, by the looks of it.”
He said they would make the building safe when the firefighters had finished on the scene, "because we have got to protect the residents".