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PHOENIX-As part of an expansion plan, Go Daddy Software Inc. has acquired the three-building, 325,000-sf Sky Harbor Technology Exchange for $9.5 million from a Chicago-based entity.

The Scottsdale-based company, which provides domain name registration and auxiliary services, plans an additional $8.5-million investment for upgrades to the 1402 E. Buckeye Rd. property. The upgrade will focus on the 117,000-sf Building C, which is to be retrofitted into a data center for Web hosting. The project’s completion is scheduled for March, delivering Go Daddy’s second data center in the area. The other facility is about five miles away at 4041 N. Central Ave., also in Phoenix.

There are no immediate plans for the 127,000-sf Building B and the 75,000-sf Building A. At some point, the smaller structure will be demolished to make way for a parking lot.

The 11-acre property, which rose as a Sears distribution center, was acquired by the seller, Sterling Buckeye Network Exchange LLC, in 2000. Sterling upgraded and retrofitted the complex, targeting telecommunications companies as prospective tenants.

“The market tanked in 2001 so due to the marketplace, Sterling wasn’t successfully able to get it leased,” comments Mark Bauer, first vice president in CB Richard Ellis Inc.’s Phoenix office, who represented both parties in the transaction. “Sterling decided on other directions for their real estate holdings,” Bauer adds.

Bauer tells GlobeSt.com that the asset was on the market 18 months, resulting in six offers. However, one snag in the deal was an existing tenant with a long-term lease, which would have required potential investors to structure a buy-out of the remaining lease. Go Daddy was ultimately willing to do just that. “The offer was strong enough from Go Daddy and helped when it came to satisfying the tenant,” Bauer says.

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