We conduct an exploratory study of industrial and academic actors’ use of and experiences with co-location projects in the context of university-industry interactions. We provide a conceptual framework of university-industry interactions that distinguishes co-location projects from collaboration at a distance, networking and market transactions. We define co-location projects as Research and development projects in which the parties from university and industry collaborate on one or more tasks and where all or a subset of the collaborative tasks are performed in the same physical space. We distinguish between geographical proximity of collaborating organizations and the actual activity of performing collaborative tasks in the same physical space. Co-location projects can thus be performed by organizations that are geographically proximate or distant. This analytical distinction allows us to analyze how co-location projects relate to geographical proximity as well as social, cognitive, and organizational proximity. We describe and analyze three collaborative settings in which co-location projects occur. We examine co-location projects in three departments at Aarhus University. In addition to collecting background material, we performed 14 interviews with actors from the university and firm side within each of the three contexts. The interviews focused on how the actors experienced the costs and benefits of, engaged in, and used co-location projects. The paper aims to provide a contextualized description and discussion of how co-location projects in university-industry collaborations is experienced by the academic and industrial actors involved. We ask what are the experienced costs and benefits of co-location projects and how does co-location relate to known concepts such as geographical, cognitive, social and organizational proximity? The examples of co-location projects involve, among others: 1) A collaborative project between a highly specialized company and research group in Physics on the creation and set-up of radiation facilities abroad. 2) The creation of a spin-off company between PhDs and a Professor that worked together at the same department of Computer Science. 3) A research project in which a research group at the department of Food Science performed parts of a research project in the lab of a collaborating firm.