More than 200 firefighters converged to battle the resulting blaze that affected four buildings.
NYC Mayor Bill de Blasio said there were no reports of missing persons, but noted that the situation was fluid.
Officials said they believe work was being done to the building’s gas utilities before the blast.
The explosion triggered a fire in a building that housed a sushi restaurant. The blaze then quickly spread to adjacent buildings, officials said.
Emergency dispatchers started received calls reporting the incident around 15:17 local time on March 26 and emergency services were on the scene in about three minutes, city officials said.
The buildings on Second Avenue at East Seventh Street are near New York University and the Washington Square Park area.
Manhattan’s East Village is a neighborhood of small businesses, restaurants and apartments.
Officials remain concerned about the area’s air quality, and told residents to keep their windows closed.
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