Over the 12 months to March 2016, output was recorded at £253m, down from £543m the previous year. With quarterly private industrial output during the first three months at £46m, the figure is the lowest level recorded since 1987.
Industry organisations the Scottish Building Federation (SBF) and the Scottish Property Federation (SPF) have suggested changes to empty property relief rates for industrial property could be a contributing factor to a decline in output.
From 01 April, empty industrial properties which previously received 100% relief from business rates as long as they were vacant will now only apply for the first six months a property is empty. After this, industrial properties receive just 10% of business rates.
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SBF Managing Director Vaughan Hart said the slump suggests changes to the rates relief is having a "major impact" on output from the private industrial sector.
"We've raised concerns for some time about an over-reliance by the Scottish construction industry on major infrastructure projects as the leading source of new work and output," he said.
"We fully support industry calls to reverse the new policy on rates relief so the industrial property market can recover, generating more new work for our members."
David Melhuish, Director of the SPF, added: "The recent figures for new construction orders for the industrial sector are a major concern. The consequence for the development sector of paying 90% rates soon after a building comes to market is that cash flow is hit, adding substantial risk for the investor and deterring projects or reducing their scale.
"This will reduce the amount of industrial space as older properties are demolished or withdrawn from the market putting more pressure on the space left in use to pay rates and to sustain or grow our business infrastructure."
(LM)
