The UNC School of Dentistry is setting up temporarily in a former pharmaceutical lab as it awaits completion of a $125 million building in Chapel Hill.

The state university agreed to lease about 69,000 square feet of office and lab space at 4301 Research Commons, off T.W. Alexander Drive in Research Triangle Park.

The three-year deal plugs most of the 90,000 square feet that GlaxoSmithKline vacated in February. The British drugmaker, which wants to cut $1.4 billion in annual costs, is consolidating space at its RTP campus.

The UNC dental school has scattered divisions across the region as it makes way for the planned Dental Sciences Building.

Construction on the 217,000-square-foot building will begin next spring and finish in August 2011. It will replace the existing Dental Office Building and the 41-year-old Dental Research Center, which are to be demolished this year.

It's part of a broader plan to expand the school's enrollment by about 25 percent to 100 students.

UNC will occupy the Research Commons building this month. It will house clinical research facilities, classrooms and offices for faculty and staff.

The state also considered sites at Perimeter Park in Morrisville and Palladian Corporate Center in Durham.

But Highwoods, one of the Triangle's biggest office landlords, offered the best deal: $27.33 per square foot of lab space on an annual basis, and $17.50 per square foot for the offices, said Linda Oakley, a UNC leasing manager.

The average rental rate for offices in the RTP submarket was $19.33 per square foot at the end of 2007, according to Karnes Research.

The deal brings occupancy at the five-building, 430,000-square-foot Research Commons park to 94 percent, said Skip Hill, senior vice president in charge of Highwoods' local portfolio.

And it should help tighten the overall submarket, where about one-fifth of the 9.3 million square feet of offices were empty Dec. 31, Karnes data shows.

Raleigh-based Highwoods had considered converting the building to office space until UNC called.

"We felt pretty fortunate that there was a large lab user that could take the space in its existing condition," Hill said.