Although my O Gauge layout is in the basement play room and laundry room, since my wife and I are empty nesters, I may build a much smaller American Flyer S Gauge layout in the mud room (between the main living area of the house and garage), which was previously used, at times, as a spare bedroom. It currently has a small bed in it.
Layouts in small spaces can be great, and OGR Magazine welcomes articles and photos about them.
My basement O Gauge layout is not huge. I believe it would be regarded as medium in size, quite long at 35 feet, but quite narrow at 3 and one-half to four feet, depending on the location. If possible, I recommend an around the walls layout so you can use backdrops as part of your scenery. Arnold