VICTORIA -- On Saturday evening, smoke blanketed a Vic West neighbourhood as fire crews worked to extinguish a blaze that was threatening to gut a commercial building on Mary Street.

"There were probably about a half a dozen fire trucks, lots of police cars," said Heather Doyle who witnessed the fire and also lives in the neighbourhood.

The fire caused an estimated $400,000 in damage and it’s being investigated as an arson.

"It’s our belief that this suspicious fire was intentionally set and this was an arson," said Const. Cam MacIntyre of the Victoria Police Department on Monday.

"It started with the dumpster, then caught fire to the structure and we arrested the man for arson," he said.

The man was arrested at a newly opened shelter one street over on Russell Street, where he had been living. He now faces recommended charges of arson.

"Arson in my neighbourhood, I think it would concern anyone," said Doyle.

The shelter is owned by BC Housing and it has been a contentious issue in the neighbourhood ever since the province announced that it had bought the property in March.

"There’s probably going to be more criminal activity," said Russell Street resident Tony Young on May 4, the day after the shelter opened.

Now, people living in the area are saying they were right.

"I mean we were already told by the police to expect an increase in incidents happening in the neighbourhood and that’s obviously happened," said Young on Monday.

In a statement to CTV News on Monday, BC Housing said that safety was a top priority.

"The province and BC Housing are committed to being good neighbours and providing a safe community both inside and outside 225 Russell St. We are taking steps to ensure there is as little disruption to the neighbourhood as possible," said BC Housing.

Young says the neighbourhood is willing to work with BC Housing and Our Place, but says there has not been a dialogue happening between the three parties.

"I think if there's problems happening now, let's deal with them," said Young. "Be a good neighbour and work with us to ensure that we're protected, as much as the residents in those shelters are protected."

Police released the man Saturday night with a future court date and conditions including a ban on possessing incendiary devices.

That man is no longer allowed to reside in the Russell Street shelter as he breached his agreement with Our Place Society, according to the organization that runs the shelter.

The investigation remains ongoing. If you have any information on the fire, you are asked to contact the Victoria Police Department.