It seems a decent translation; "It is by that building." The only confusion I can think of is that we sometimes use "by that building" to mean "just past that building." "You go by that building, and it's on the left." "It is by that building, around the corner." Etc. Languages. What a mess!
What I was saying is that if it is a typo, that means that Duo was unaware of the incorrect spelling, so they would have accepted that answer as correct. Since they did not accept that choice as valid that means they were aware of the incorrect spelling and penalized students who chose it.