A $238 million sale of a pair of apartment complexes in Phoenix’s Gilbert suburb shows why the area is on a record-breaking multifamily sales run over the past year.

Ezralow Co., based in Calabasas, California, bought the Azul at Spectrum and adjoining Borrego at Spectrum apartments from San Diego-based Premiere Residential Communities, public sale documents and CoStar data show. Ezralow paid $381,670 per unit, about 5% above the going price for apartments in Gilbert, one of the city's most expensive submarkets for apartments, according to CoStar Market Analytics.

The 360-unit Azul at Spectrum, at 3134 S. Market St., sold for $138.2 million, the highest total price on record paid for an apartment property in Gilbert, CoStar data shows. Ezralow paid just under $100 million for the 264-unit Borrego at Spectrum next door at 3004 S. Market St.

Despite blistering double-digit rent growth, Phoenix remains a significantly less expensive place to live for renters compared with such major California cities as Los Angeles, San Jose and San Francisco, according to a recent analysis by Jay Lybik, CoStar’s national director of multifamily analytics.

Moving from Los Angeles to Phoenix can reduce a household’s yearly rent cost by $6,000 on average, while renters moving from San Jose can save $17,000 annually, despite the run up in Phoenix apartment rents in recent years, according to Lybik's study.

"Companies continue to announce new jobs, and household incomes are increasing. And although rents have increased notably over the last three years, Phoenix still has great affordability compared to other large markets," Sean Cunningham of CBRE, part of the team that represented the seller in the deal, told CoStar News in an email.

Competition to buy apartments has driven up Gilbert’s average price per unit by about 45% to $362,000 since mid-2020, CoStar data shows.

The latest sales are part of nearly $17 billion in apartment sales across greater Phoenix over the past 12 months, according to CoStar’s latest Multifamily Capital Markets Report for Phoenix. That total exceeds such core multifamily markets as New York City and Los Angeles, as investors lured by double-digit rent gains and a ready supply of tenants flocks to the Phoenix area.

The city's strong population growth, housing affordability and Arizona's attractive quality of life are keeping the long-term outlook bright for investors, although price appreciation has shown signs of leveling off, Connor Devereux, CoStar's director of market analytics in Phoenix, said in an email.

"Last year’s sales volume was unprecedented and nearly double the next-best year on record," Devereux said. "Sales volume in 2022 will still be very high on a historical basis, and even though it may not exceed last year’s pace, lots of deals are still getting done."

Although recent increases in interest rates and general economic uncertainty have caused some investors to hit the pause button, multifamily sales in Phoenix are 11% higher through the first three quarters of 2022 compared with the same period in 2021, CBRE's Cunningham said.

"As the capital markets work through the fluid environment caused by rate increases, we anticipate a return to the strong sales volume trend we have seen over the last three years," Cunningham added.

CBRE’s Sean Cunningham, Asher Gunter, Matt Pesch and Austin Groen represented the seller.