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
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.
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.”
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.