If I demolish a floor in Tiny Tower, will it just remove the store that's built there and let me build something else? Or will it remove the floor entirely and force me to pay to build a new one?
When you delete a floor, be it a residential or commercial unit, the floor returns to empty status and is available for you to build something new.
The button in-game says "delete" which has a slightly different connotation than the confirmation dialog which says "demolish". Either way, you're really just removing the current floor usage.