Firefighters were dispatched at 7:11 a.m. to the headquarters of Red Hill Construction, located in the 1400 block of St. Andrews Place, where thick black smoke was seen, Capt. Steve Concialdi said.
No one was inside, and 30 firefighters attacked the blaze. The building suffered $150,000 in damage to the structure and $200,000 damage to its contents, Concialdi said.
The building's office area had minimal damage, but the warehouse, several vehicles and most of the equipment inside was destroyed, said Andy Youngquist, owner of the company.
Investigators determined the cause was spontaneous combustion of bundled-up rags soaked in a chemical used to stain wood.
"They were using the rags to stain some lumber," Youngquist said. The building will need a new roof and several repairs, he said.
Youngquist, who was in Monterey at the time of the fire, said his office employees were working from home Thursday. He said he will begin looking for a temporary building in the next few days.