Following up on this photo , the single westernmost Blue Building still standing can be seen close to Arsenal Street. In 1938, tenders were invited for the demolition and removal of buildings at or near the Arsenal Yard as shown here The 1938 PWD Report under Demolition of Buildings at Arsenal Street provides an explanation - the work consisted of demolition of two buildings in Arsenal Yard, and the adjoining old building used as a workshop by the P.W.D. Electrical Office, to allow for the re-alignment of Queen's Road. The work commenced in May and was completed in August 1938.
I think the old building mentioned is the single Blue Building.