The six boys and two girls, all from the Armley and Bramley areas, were arrested on Monday night and this morning on suspicion of arson.
Fire crews from 22 stations across West Yorkshire were called upon to help tackle the fire, which began at around 8.40pm on Bank Holiday Monday.
Ten pumps, two aerial appliances and support units worked into the early hours to bring the blaze in Waterloo Lane, Bramley under control.
Rebecca Shepherd, whose home overlooks the warehouse, phoned the fire brigade.
She said: “We’ve got a baby that normally wakes at the squeak of a floorboard but slept through the whole thing!”
Plumes of smoke could be seen across the city and from the M62 motorway.
The fire began to spread to trees bordering the site at one stage, but was brought back under control.
No other properties were affected and there were no reports of injuries.
Amy Flanagan, who lives in Waterloo Lane, said: “It was my daughter, Evelyn, who saw it first. She’s five. She’s never seen smoke or fire before. She was terrified, but very brave.
“There was smoke coming from the roof at that point. It got really bad.
“At one point we were stood outside talking to our neighbour and we could feel the heat.”
Dozens of people stood out in the street filming the fire and taking photos on their mobile phones.
Cars filled the car park of Bramley Community Centre as drivers pulled up to watch the drama unfold.
Gemma Wilson saw the smoke and flames from her home in Raynville Street, Bramley.
“I thought it was a house that was on fire at first,” she said. “We started walking up and people were crowded on the shopping centre car park.”
An investigation into the cause of the fire has now begun.
The teenagers being questioned by police were two boys aged 14, three boys aged 15, one boy aged 16 and two girls aged 14 and 13.
Detective Inspector James Entwistle, of Leeds CID, said: “The building is very frail and we expect within the next seven days it will be taken down to protect the safety of the surroundings.
“We expect this may cause some disruption for the next several days and while this disruption is regrettable it is absolutely necessary to ensure public safety.
“We are working hard with partners to minimise the impact of this work and again, I want to thank residents for their co-operation during this time.”
People living in New Farnley, Churwell, Gildersome and surrounding areas were advised to keep their doors and windows closed on Monday night due to large amounts of smoke in the atmosphere.
Around 50 firefighters were at the scene at the height of the fire along with support units.
They included crews from as far away as Shipley, Halifax, Pontefract and Huddersfield.
Two pumps and an aerial appliance remained at the scene this afternoon and were expected to be on site for at least part of tomorrow.
Road closures put in place in Waterloo Lane, Town Street in Bramley, Broad Lane and Raynville Road had all been lifted.
Fencing was put up around the building before Waterloo Lane was reopened at around 1pm today.