It will still have huge surge though. Surge isn't correlated with the intensity at landfall but is a function of the size, intensity, and time over water of the entire history of the storm. All the water that the storm was pushing out in front of it will still be there. Similar situation as Sandy which was a massive storm over water for a very long time and even though it made landfall with only cat 1 winds, those other factors caused 14 foot storm surges.