"An Israeli military force backed by a bulldozer forced their way into Yasamin neighborhood in Al-Bireh town in the first hours of the day and demolished the structure," Mahdi al-Khatib told The Anadolu Agency.
The makeshift building housed a factory specialized in manufacturing steel doors, he said, noted that the demolition cost the owners around $64,000 in losses.
The Israeli authorities are yet to comment on the demolition.
Yasamin neighborhood falls within "Area C," which covers nearly two thirds of the West Bank and remains under Israel's full civil and security control, as laid down in the 1995 Oslo II Accord between Israel and the Palestinian Authority.
Palestinians complain that the Israeli authorities frequently prohibit construction of cement and/or iron structures in the region.
Israel occupied East Jerusalem and the West Bank during the 1967 Middle East War. It later annexed the city of Jerusalem in 1980, claiming it as the capital of the self-proclaimed Jewish state – a move never recognized by the international community.