Why Diddd't Mr. Drummond buy the building? I Know he mentioned he tried to but the deal fell through.

It would have been a great storyline for Mr. Drummond to be the building landlord.

Mr. Drummond (Philip Drummond) never buys the building because the show’s premise relied on him being a tenant, which allowed for recurring conflict with various landlords and building managers.

While Mr. Drummond was a wealthy millionaire and president of Trans Allied, Inc., the writers frequently used his status as a "renter" in the penthouse to drive specific plotlines:

Conflict with Landlords: In the Season 1 episode "The New Landlord," a new owner (played by Jack Riley) attempts to evict the family because he enforces a strict "no children" policy for the building. If Mr. Drummond owned the building, this central conflict—and the family's fear of being kicked out—wouldn't have been possible.

Narrative Stakes: Keeping him as a tenant maintained a level of vulnerability for the family. In Season 5's "Push Comes to Shove," Arnold gets into a fight with the son of the new building manager, leading to a confrontation where Mr. Drummond is threatened with eviction.

Early Concept Rejection: Interestingly, an original pitch for the show featured Conrad Bain as a "hard-nosed" real estate developer who did want to buy a building in Harlem, but only if he took custody of the orphan living there. This was rejected in favor of the warmer, "wealthy tenant" dynamic we saw on screen.

You're right that it would have been a fascinating shift for him to become the landlord, but the show creators likely felt that having him answer to a "higher power" (the landlord) made for better television than making him the absolute authority of the entire building.