The fire broke out at the Escobar building on Market Street shortly before 23:00 BST on Monday. At its height, 12 fire crews and about 60 firefighters were tackling the blaze. No one was seriously injured, police said.
Police confirmed the two boys remain in custody as investigations continue. Road closures were put in place on Upper Parliament Street, Goldsmith Street, Market Street and surrounding areas. Nottingham Express Transit, which operates the tram network, switched off overhead power lines in the area due to the fire, causing disruption to tram and bus services. People have been advised to avoid the area.
The Grade II listed building has been left at risk of internal collapse, and a joint police and fire investigation into the cause of the fire is ongoing.