Santa Claus may take a back seat to Har­vey

Area re­tail sales are likely to soar, but many res­i­dents will be buy­ing essentials to fix homes in­stead of tra­di­tional hol­i­day gifts

Houston Chronicle - - BUSINESS - By Kather­ine Blunt

D AVID Flores had nearly for­got­ten about the long strand of Christ­mas gar­land un­til Hur­ri­cane Har­vey flooded his Bel­laire home with more than a foot of wa­ter.

The rem­nant of last year’s hol­i­day party had be­come a fix­ture in the liv­ing room, much to his wife’s frus­tra­tion, and it re­mained the only thing left hang­ing as he stripped the floors and knocked out dry­wall. He eyed the string of plas­tic pine, con­tem­plat­ing what this year’s Christ­mas sea­son would look like af­ter he re­paired the ground floor and re­placed a ru­ined car.

“This is dev­as­tat­ing,” he said. “Of course it sets you back.”

Re­tail sales in the Hous­ton area are ex­pected to soar dur­ing the all-im­por­tant hol­i­day sea­son as res­i­dents make home re­pairs and re­place pos­ses­sions de­stroyed by the storm. But the need for essentials, econ­o­mists say, could dampen spend­ing on the wish list items that typ­i­cally drive the end-of-the-year shop­ping rush.

Us­ing Hur­ri­cane Ike as a model, Univer­sity of Hous­ton econ­o­mist Bill Gilmer an­tic­i­pates a $2.3 bil­lion in­crease in fourth-quar­ter sales in the metro area. Much of that spend­ing, he said, could come at the ex­pense of tra­di­tional hol­i­day shop­ping.

“What­ever you might have put away in your Christ­mas fund might have to be put to­ward other pur­chases right now,” he said.

Moody’s In­vestors Ser­vice ex­pects the de­mand to boost sales at home-im­prove­ment chains, auto deal­er­ships and home-decor stores in the com-

ing months. How­ever, it noted that places like Katy­based Academy Sports + Out­doors, ap­parel stores and other re­tail­ers will likely lose sales on nonessen­tial items.

Moody’s re­tail an­a­lyst Char­lie O’Shea re­called the ex­penses he faced in 2012 when Su­per­storm Sandy dam­aged his roof and knocked out his power as it slammed the New York area. He and his fam­ily shelled out for a lengthy ho­tel stay as crews made re­pairs right be­fore the hol­i­day sea­son.

“A fam­ily bud­get is a fi­nite num­ber,” he said. “There are go­ing to be holes in the bud­gets for a while.”

Re­tail­ers poised to cap­i­tal­ize on the need are shoring up in­ven­tory and nail­ing down expansion plans. A re­cent re­port by bro­ker­age firm CBRE an­tic­i­pates fewer fourthquar­ter va­can­cies in Class A re­tail real es­tate, which is al­ready more than 97 per­cent oc­cu­pied.

“Har­vey made a tight mar­ket even tighter,” said Robert Kramp, the firm’s re­gional direc­tor of re­search and anal­y­sis.

Home im­prove­ment

The re­port noted that home-im­prove­ment re­tail­ers have ex­pe­dited expansion plans as res­i­dents start on re­pairs. Home De­pot, for ex­am­ple, re­cently leased a 300,000-square­foot ware­house on the city’s north­west side.

The re­tailer also hired 1,000 Hous­ton-area as­so­ci­ates in the wake of the storm and brought in volunteers from other mar­kets to un­load thou­sands of sup­ply ship­ments. It pro­moted an­other 1,000 part-time em­ploy­ees to full-time sta­tus to han­dle the rush.

“Ob­vi­ously, there’s very high de­mand,” spokesman Matt Har­ri­gan said. “We don’t plan on slow­ing down.”

Wait­ing on checks

It’s im­pos­si­ble to pre­dict how the storm will af­fect dis­cre­tionary spend­ing in the com­ing months. Many res­i­dents, wait­ing on in­sur­ance checks and Fed­eral Emer­gency Man­age­ment Agency in­spec­tions, haven’t de­ter­mined how much they’ll have to pay out of pocket for re­pairs and re­place­ments.

“For a lot of peo­ple, their lives are on hold,” said Pa­trick Jankowski, re­gional econ­o­mist with the Greater Hous­ton Part­ner­ship. “They’re not go­ing to be rush­ing out to make any ma­jor pur­chases un­til they know whether they’re go­ing to re­build or move some­where else in town.”

Sharon Messer­smith, a Bel­laire res­i­dent, is wait­ing on word from FEMA in or­der to de­ter­mine ex­actly how much it will cost to re­place her home with a big­ger one higher off the ground. She and her hus­band de­cided to re­build when their house flooded for the third time, wreck­ing fur­ni­ture and killing the dish­washer.

She ex­pects to re­lo­cate to a rental house in De­cem­ber as work gets un­der­way. The move, she said, will prob­a­bly limit her hol­i­day shop­ping trips, if not her spend­ing.

“Good old Ama­zon,” she said.

Flores, who has lived in his house for 20 years, hasn’t de­cided whether to stay or go.

The flood­ing gets worse with ev­ery ma­jor storm, he said, and he has a trav­eler’s itch. Spain is on the short­list.

Mak­ing it liv­able

For now, he plans to com­plete the costly re­pairs needed to make the house liv­able. Friends and neigh­bors, eye­ing the grow­ing pile of rub­ble in the yard, have stopped by to of­fer sup­port.

Al­ready, some have asked whether his an­nual Christ­mas blowout is still on the cal­en­dar. Prob­a­bly, he said. But maybe not.

“I just don’t know,” he said. “I have no plan.”

Mark Mul­li­gan / Hous­ton Chron­i­cle

Gana and Aruna Ma­hen­dravada shop for kitchen ap­pli­ances at the Best Buy on Rich­mond near Loop 610. Their home in Bel­laire was flooded with 10 inches of wa­ter last month.

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