Liability issues...No business wants to be responsible if in running their business, fires or other catastrophes cause death to the tenants and families above their businesses. Local taxes are high and the property owners are sort of pie in the sky in terms of what they think they should be getting from businesses leasing these spaces. So these places are empty and the local strip malls and small graasy plots(think taco bell out in front of a strip mall in its own unique spot) are still sought out. Huge risk for businesses that have tenants in apartments above them.
Yes, they usually make those buildings 4 stories or less so they can use wood frame construction because it’s cheaper.
I worked in a 6-story office building and the floors were concrete. Obviously a bit more fireproof than a wood-frame building.