Consider two factors: Worker commutes and real estate prices.

A single-floor factory is more efficient in most applications as you do not incur movement penalties as materiel moves vertically. Horizontal movement costs are the same in either application.

When a factory's workforce lived downtown in a city, it made sense to build the factory downtown. Additionally, many cities had ports or rail hubs downtown. Transportation was expensive, both for workers and for freight. Downtown real estate is expensive. To minimize that cost, factories were built on multiple stories.

As human and freight transportation improved in the early 20th century, the de-facto time and expense of distance decreased, and it became possible to acquire large tracts of land for flat factories just outside a city and bring the workers and materiel efficiently to and from that location. The widespread availability of the automobile contributed greatly to this trend, as workers could easily commute out of the city to their workplace.

As an aside, one of the drivers of suburban growth was the movement of manufacturing from city centres to outlying areas. Why live downtown when you can live at the edge of the city, where housing is cheaper and closer to your workplace?

tl;dr: more efficient transportation made physical distance between workers, freight and transportation hubs less important.