When working on your MBA, odds are that you will be exposed to Michael E. Porter and his most well known book, “Competitive Strategy”. It is the work where he first developed his framework for analyzing an industry or competitor by using the “5 Forces” of Competitive Position Analysis.
Motivated by my relationship with a local businessman and my knowledge of his latest venture, I used Porter’s 5 Forces to retroactively look at his project’s chances. While he may not be familiar with Porter, his experience, street smarts and philosophy made his approach amazingly similar and could be a text book example for Porter’s concepts.
Framework/Theory
After the sale of his food distribution company, Mr. Robert Meeks decided to develop the real estate that he had purchased during the time he owned his company. Significantly, all of his properties were adjacent to the others. From 2006 forward, he created a small-unit business park (500 square feet and up) that provided a home for over a hundred small businesses. He helped many of them (mine included) survive the “Great Recession”.
In the beginning of 2017, Mr. Meeks began planning a facility called the “Fortress”, in order to utilize several acres of land purchased across the street. I should add that one his rules is: “My properties must be within eye-sight of my office”.
He theorized that the East Orlando area was in need of a storage facility for over-sized vehicles such as RVs, Tractor-Trailers, Boats and Buses. Furthermore he understood that security was going to be a critical requirement. With over 50 years experience in the local market and a huge network that provides him with information, Mr. Meeks proceeded to built the”Fortress”–a gut decision based on millions of small facts.
Supplier Power
Once it’s built, a storage facility does not rely on outside suppliers to make a product. It is the cost of establishing, financing and building the facility that determines it’s future profitability.
Because of his policy of building only one project at a time, Mr. Meeks has a network of suppliers that know him to be a careful shopper and a prompt payer. The result was a cost per sq ft that was way below market.
The “Fortress” was self-financed, which eliminated interest as a cost and left the local zoning board as the supplier with the most leverage over the project.
Getting the project approved was a major task and involved several agencies, not all of them being open to his unconventional project.
Decision – go for it!
Buyer Power
According to local newspaper reporting, break-ins and vandalism are a big issue in the vehicle storage businesses. By focusing on security and amenities geared toward large vehicles, the “Fortress” created a situation that was difficult for buyers to get in other facilities (most consist of an open field with designated spots and a barbed wire fence). If you want to store a $ 500,000 RV or a $ 30,000 boat in the greater Orlando area there are few options that are both secure and centrally located.
In addition, the location of the “Fortress” offers easy access to the population of greater Orlando along with it being a short distance from major expressways and the I-4 corridor.
The buyer population for RV’s and boats is significant and storage alternatives are few.
Decision – go for it!
Competitive Rivalry
While greater Orlando has an abundance of storage facilities, there are only 20 RV and 19 Boat storage facilities. Not one of the competitors offers “under roof”, utilities and secured access together.
Decision – go for it!
Threat of Substitution
A substitution threat however is that the customer base ages out of the need for storing their RV’s or boats. With the trend towards the “sharing economy” both Millennial and Generation Z members may not have the same need for this type of storage.
Decision – maybe go for it!
Threat of New Entry
While the possibility of another company following the example of the “Fortress” is small, it does exist. However, the zoning issues in greater Orlando combined with land costs, environmental impact and location make this a small probability.
Decision – maybe go for it!
Result
The “Fortress” ended up being designed by Mr. Meeks and built by Richard Copeland Construction. It has 67,000 square feet under one roof and it is purpose-designed. There is only one access point for vehicles and people to exit or enter. Its utility and wash stations are strategically placed in areas where even the largest RV can do a U-turn. Security in addition to access, video and guards is further enhanced by concrete filled cinder block and steel construction.
The property is managed by BMZ Partnership and has security on duty and on premises 24 hours per day, 365 days per year.
It had a soft opening January 2019 and as of April, there are very few spaces that are still available.
