Freshwater Development Brings Luxury Real Estate to Traverse City's Climate-Resilient Market

Written by:

Steve Marcinuk

Date:

29 May 2025

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Michigan’s stable climate and abundant freshwater are turning heads in the real estate world, particularly among buyers thinking decades ahead. Andrew McCarthy, founder of Freshwater Development, sees the state as an increasingly attractive option for those weighing long-term risks like insurance affordability and climate resilience.

“Michigan has a very moderate climate that remains stable. When considering a 30-year horizon for home ownership, including factors like insurance availability and affordability, Michigan appears on many people’s radar given its proximity to one of the world’s largest freshwater resources,” McCarthy explains.

This perspective is not just developer optimism. It underpins a strategic investment approach that is already gaining traction in Traverse City’s growing luxury market. As climate change continues to influence where and how people buy homes, McCarthy is aligning his company with a future where environmental stability is a core part of real estate value.

From Manhattan Skyscrapers to Michigan Waterfront

McCarthy’s journey to founding Freshwater Development began with formal training in architecture at the University of Michigan, followed by professional experience at prestigious New York firms. His work on the iconic Steinway Tower at 111 West 57th Street, a 90-story luxury residential building constructed through the middle of the landmark Steinway building, provided valuable insights into high-end development.

“One of the large takeaways for me was the ability to self-perform construction,” McCarthy explains. “JDS builds and develops as their own general contractor when they do projects, specifically in New York. That model works very well at the high-end luxury scale. It enables you to execute at a high level, control your schedule and your budget and your final product.”

This integrated approach to development and construction would later become a cornerstone of McCarthy’s business model at Freshwater Development.

Testing the Investment Thesis

In 2021, McCarthy founded Freshwater Development and acquired seven acres with 426 feet of water frontage in Leelanau County, Michigan. After repositioning two existing homes on the property, he undertook a ground-up build on a vacant parcel.

“We broke ground in October of 2023 and were furnished and sold and closed by June 18 of 2024,” McCarthy notes. The property sold for $4.7 million—approximately $1,200 per square foot for the 3,700-square-foot home—validating his investment thesis focused on Traverse City’s natural resources and growing appeal.

“That sale really gave some validity to the underlying investment thesis, which was focused on Traverse City, focused on water frontage, focused on the natural resources that Michigan as a state offers,” McCarthy explains.

The success of this initial project catalyzed Freshwater Development’s expansion into downtown Traverse City, where the company is now developing two luxury residential projects: 111 State and 100 Park.

Strategic Development Following Public Investment

McCarthy’s approach to site selection follows a clear strategy: “Development that we do typically follows where the public funding is.”

In Traverse City, he’s identified several significant public investments that signal growth potential:

• Airport Expansion: Approximately $150 million in funding to expand Traverse City’s airport, which already serves about 22 direct destination flights year-round to major hubs including New York, Boston, DC, South Florida, Texas, the Carolinas, California, and Colorado.
  
• Infrastructure Improvements: A major infrastructure project along the parkway that wraps around the beach frontage and serves as the main artery through downtown.
  
• Rotary Square Park: $7 million in grant funding to reimagine this city-owned property, which sits directly across from Freshwater’s 111 State development.
  
• Boardman River: Environmental protection and enhancement of this waterway, which flows into Lake Michigan and borders Freshwater’s 100 Park development.
  

“We bought a parcel directly across from [Rotary Square Park] that looks right at it. So people out their windows of our homes will know that forever, there’ll be a park in front of their window, and never a building that is built full height right out their window,” McCarthy explains, highlighting how public investments enhance the value of his developments.

Climate Migration as a Market Driver

McCarthy identifies climate migration as a significant market driver for luxury real estate in northern Michigan—and he’s already seeing evidence of this trend.

“A couple of our buyers have reached out in recent weeks from California, potential buyers that are interested in our projects, and people are thinking about a second home, and where’s a place that is really secure from a climate standpoint, long term.”

The developer points to specific environmental challenges driving this interest: “Places like California with wildfires, places like Texas and Arizona where it’s very hot in the winter, places like South Florida where there’s flooding, and in New York where they’ve had issues as well with flooding and storms.”

The long-term security of Michigan’s climate and natural resources is becoming a significant consideration for luxury homebuyers. “If you put a 30-year mortgage on something, when that mortgage matures, what’s happening with that piece of land and the surrounding landscape?” McCarthy asks. “I think that’s something that people in future generations and currently right now are starting to really think about.”

Defining Luxury Through Materials and Experience

Freshwater Development’s current flagship project, 111 State, features two full-floor penthouses that could set price records for the Traverse City market. Each five-bedroom, three-bathroom residence spans approximately 2,500 square feet of interior space, with an additional 1,100-square-foot private roof deck.

The penthouses feature private elevator access, climate-controlled garages, and are situated above Christie’s International Real Estate’s retail space. McCarthy’s approach to luxury is comprehensive, focusing on both materials and experience:

“It is the first fully electrified building in Traverse City,” McCarthy notes. “There’s no gas coming into the building. So what that means is induction cooking, electric heating and cooling, and it’s energy efficient.”

The material palette emphasizes natural elements: “All appliances are panelized and wrapped with solid wood custom cabinetry. The countertops are Taj Mahal, which is a very durable quartzite stone with a leather finish. All the floors are white oak, solid white oak, thicker board. Primary bathroom has marble on the floors, the walls, and the ceiling.”

McCarthy describes his design philosophy as “quiet luxury”, an approach that prioritizes authenticity and quality over ostentation. “It’s not about anything glitzy for the purpose of being glitzy, it’s for the purpose of just very natural, authentic materials, quality materials, and a very quality construction process.”

This attention to detail extends to the construction process itself: “When you have two layers of plywood, and you put a 10-millimeter acoustical mat to sandwich between those two layers just to add that extra step so that the high heels or the little ones scampering across the floor, you never hear it from the floor below.”

Transparency Through Visualization

One distinctive aspect of Freshwater Development’s approach is its use of renderings as both a design tool and a communication device with potential buyers.

“We use renderings as a way to prove our outer design concept, and then we order the exact materials that we rendered,” McCarthy explains. “Right now, in storage in Traverse City, we have all the materials from our renderings for both units, so that we take them out of storage and we install them ourselves, as a general contractor.”

This approach ensures transparency with buyers: “What you see in the renderings is exactly what you’re going to get in the finished product. And it helps us have a very transparent conversation with buyers.”

The Turnkey Luxury Experience

Looking ahead, Freshwater Development is preparing to launch its 100 Park project in June: three brownstones, each with private boat slips and parking. The company is also actively seeking additional sites in downtown Traverse City, with a focus on water frontage and corner lots that maximize light and air.

McCarthy sees a market opportunity in providing a comprehensive luxury experience: “We see the demand of kind of a turnkey residential space. The last home that we sold was fully furnished, and we furnished it with all of our discounts from major furnishing companies like Four Hands, Restoration Hardware, Room and Board.”

This turnkey approach extends to personalized service: “When people want something their closet done, or they wanted a dog gate built, we built it for them, and really providing, Freshwater wants to provide a white glove very special service to other buyers that buy our homes.”