I prefer the couch against the wall. Seeing more floor space makes the room feel larger. Also, there's much better flow for moving about the space.

I like the one against the wall

Personally, I prefer the sofa backed up against the wall (second photo). You're living room seems too small, and the sofa too bulky, for placement shown in the first photo (with the sofa as a divider).

Definitely the second layout, with the sofa against the wall.

I prefer the couch against the wall as well =) Good luck!

is there anyway you could put it in front of the larger window or break up the sectional to make a conversation area?

I like the second layout best. Perhaps a cream color to replace the green walls and curtains to replace the blinds in order to soften the look.

Second is better. I really dislike TVs in front of windows.

Has to be the one with the open floor plan. It makes the room seem twice a big. Plus the placement of the TV, in the first picture, blocks the view.

Definitely put the sofa against the wall. The other location feels claustrophobic. I think if you paint a light basic beige on the walls you could still use the blinds although they would look alot better in white or offwhite. Then go wild with color in accent pillows etc. My favorite, red! Agree with you, curtains would lighten things up. Something light and gauzy on rings. Are u going for privacy? Plantation shutters would be fantastic!

I think the sofa against the wall works best. As for the blinds, I think i would chuck them and replace them with light linen sheers.

The dark color of the vertical blinds with the heavy horizontal valance brings the windows down big time.

A sand color for the walls and a white trim would make this living room a pleasure to hang out in - but please relocate the dog cage! Am I sounding too Bepsf-ish?

Ditto, couch against the wall.

What about the sofa in front of the largest window - leaving a space of 6" - 12" between the sofa and the wall (space for curtians to hang)? That way your focal point walking into the room would be an inviting place to sit rather than a TV. If possible then mount your TV to the wall across from the windows (far left in pictures).

Perhaps a cute/cozy little chair in the far left corner - round area rug in the middle of the room (to break up all the square corners of the sofa and windows) and colored accent pillows and throw on the sofa. A small scale glass coffee table would also give you a place to set your drink/magazine without visually taking too much space.

Second picture for sure. If you plan on staying there long, and have some room in your budget, I'd also ditch the sectional and get a slimmer 3-seat couch and a small arm chair or two. And also paint over the green.

I like the second picture. But I'd think about keeping the panels...just put some curtains over them. They give you a lot of privacy, and block a lot of light; they also make for a more energy efficient space.

I"m looking at painting some of my house this month...I'm leaning toward a blue-grey neutral. Good luck!!

definitely the second layout!

NUMERO DOS is my vote for sure...open, airy, inviting!

although i like the comfort of a closed-in and tight space...i think in such a small scale, you want to make the room feel bigger and more inviting, esp when having guests over and while cooking.

when entertaining you'll be able to interact with your company while they are on the couch in option two

i think that's your best bet...bravo for actually taking two pics of two options and sharing...everyone has something to learn from you because that's the BEST WAY to visually figure out a layout

cheers
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I ditto everyone else re: couch against the wall. Definitely opens up the space. One commenter mentioned moving the sofa in front of the big windows, but those look like doors to a patio to me.

As for the TV...maybe mount it to the wall there and install a free-floating shelf beneath it for the cable box and a small decorative item? I bet they have good options for that at Ikea or Target/Wal-Mart.

The color is a bit overbearing in such a small space and does limit you as to decor, so I agree with maybe a neutral shade. Grayish-beige is always a winner for me.

Definitely the couch against the wall. An put the TV on something smaller and lighter. I kind of like the spring green and navy combo (at least it looks navy in the pictures). I think it would work if you kept everything else sparkling white with an occasional touch of navy in throw pillows or something.

Did you put the green paint there yourself? If so, and you like green, just find a less neon shade (maybe something more avocado-ey?), put up bamboo roller blinds, get a sisal rug, put that little rattan ottoman/table at the other end of the sofa (like an end table) and put a small lamp on it. Hang some interesting (large, or at least big enough to match the scale of the sofa) art over the sofa, get rid of the black tv stand in favour of something light, low and simple (declutter it completely) and hang a piece or art above. Is that a hook in the ceiling between the 2 windows? Hang a nice plant there (not too high).
More the bunny cage so it isn't the first thing you see when you walk in the room.

Oh, my plan was for the 2nd layout:-)

Second photo, couch against wall.

Also, off-white walls will open up the space. I'd also go for light colored curtains, and a coat of light colored paint on the tv stand. The space is too tiny for the dark stuff.

open. always open

I am a huge fan of layout number two.

I'd also like to see a more sage tone of green on the walls, creamy curtains and a nice colorful rug to tie the whole area together. I would also like to see a small side table to the right of the couch, maybe something that matched a slightly smaller tv stand? That one seems kind of huge.

second! airy=)

another thought...if you do like the green, but it's too much....maybe do a creamy beige for most walls and do one accent wall in the green?

On second thought, putting the couch in front of the windows on the right and relocating your flatscreen to the large wall would look great. You could put the tv on a low stand like this from Ikea: http://www.ikea.com/us/en/catalog/products/S39857807
or simply mount it on the wall.

If you removed the blinds and put in light curtains it would let in more natural light. Repainting the walls a cream color with the tv wall a darker accent color - a creamed coffee color would be nice.

You could also use some large artwork and better lighting - either replace the ceiling fan light or add standing lamps.

sofa against the wall, sheer white curtains (ikea has some very inexpensive rods and curtains), silvery light grey walls. i'd go with a lower, lighter tv stand. again, if $ is an issue, ikea has some cheaper ones. then toss some colourful cushions on the sofa and away you go!

Layout & Furniture
---Layout #2 (couch against the wall) is better.
---The sectional is overwhelming the small space. Consider breaking it up so you have a sofa and chair. If you don’t have room for the chair here, move it to another room, lend, store, or get rid of it.
---Use the small rattan ottoman as a coffee table
---The current TV setup creates a black hole effect. Replace the stand with something lower and lighter in color. Maybe a wood in the same tone as your floor. Get something with doors or drawers so you can corral the clutter. I suggest frosted glass doors (or something similar) as they give a “lighter” appearance. All those little electronics around the room should be put away or consolidated.
---Get the tiny plant off the floor (it screams, “this room is not large enough for a table that I can sit on!”)
---Can you move the bunny cage? I mean, I’m not suggesting you exile a pet… but that cage is large. If not, move it to a less conspicuous part of the room so it is not the first thing you see when you walk in.

Paint
The room has a lot of angles that make it feel disjointed and awkward. The paint treatment on the ceiling inset is adding to that feeling. Paint can help soften and enlarge the space. Two options here:
---Paint the walls and ceiling the same color. Or,
---Paint the “soffit” area the same color as the walls. With this approach, only the highest part in the center is treated as the ceiling.
---I would also stay away from dark or bright colors here. It will just overwhelm the space. You have a beautiful wood floor; choose something soft and organic to work with that.
---I would also stay away from an “accent” color wall in this scenario. With the angles you have and the size of the space, an accent will only break it up further.

Window Coverings
---The other way to soften the angles and enlarge the space is to choose window coverings that blend in with your wall color. I’d go with drapes; the specific drape selection would depend on your need for privacy / light control.

I vote for sofa against the wall..
Add an area rug that's big enough to tuck under the front of the sofa a bit, a coffee table (maybe round and glass - to keep it more visually open?), and an endtable on the kitchen end of the sofa. Definitely a neutral instead of the green, but some artwork over the sofa would be great.

I really like the suggestions that mjr had for your room. Your sofa is already so neutral, you might end up with a bland, boring room if you neutralize everything.

I'd suggest painting that stripe of ceiling that is lower than the rest to blend in with the wall better, or match the top green area with the ceiling--right now it is too choppy/angular.

Throw down a nice rug like foggirl9 said.....and try the site http://www.knockoffwood.blogspot.com to find some ideas for coffee/end/tv tables. Keep these low/unobtrusive.

Lastly, pick some more interesting throw pillows for the couch but not too many...you will be good to go (as long as you hide the rodent cage). Lots of potential!

Definitely the second one. More floor space = less crowded looking

I would do the second picture layout. I would move it up more away from the window get rid of the shades and put floor to ceiling curtains to make the rooms look bigger, also maybe some mirrors.
--
Another suggestion, can you put the tv against the left wall, it's just a bigger wall... try it, I find myself changing things up all the time and I have a 2 seater sofa and a left arm chase so it makes it hard to rearrange but I have fun :-)

Is that a unanimous vote for #2? Because I must agree with everyone else...

Definitely put the sofa against the wall. Repaint those walls a more neutral shade. Go with lighter curtains and leave them open most of the time. I agree with the other posts about the TV stand - get something smaller and more streamlined. What is that random table behind the countertop?

Couch against the wall.
White walls.
Long, white curtains (http://www.ikea.com/us/en/catalog/products/40111987)
Sofa table - white LACK (http://www.ikea.com/us/en/catalog/products/20011413)

And then add colors by using cushions etc.

I promise that your apartment will look twice as big, and you will find it very easy to change the colors depending on your mood. A smaller space is almost always better of in very neutral colors, and it will not look to bright if you chose white walls.

Please post an after-image if you do paint your walls.

The couch against the wall looks the best - though a huge improvement would have been NOT buying the sectional.

Sofa against the wall.

Paint in a warm, light, neutral but NOT close tot he color of the sofa. (Maybe a nice cafe au lait color?) White trim.

Make a tailored tablecloth for the bunny pen. I'd do a top with four separate panels attached at the top that fit the pen exactly. Then when you don't want to look at the pen, it can appear to be a table. BUT, having bunnies, I know you will need to protact the fabric from nibbles, so I would cut a piece of thin plywood the size of the top of the pen and place it on the wire so the cloth is over it. And I'd cut panels of cardboard boxes and place those loosely against the wire between the pen and the tablecloth. (They can be replaced if bun gets ahold of them.) Don't put anything easily broken on top, bunnies can be vigorous. But a basket with flowers or something decorative might work.

Bring color to the space with art, a rug, sofa pillows, and a sofa throw in one bright color you like.

Dump the vertical blinds. If you can't, open them all the way and hang light colored opaque drapes over them.

Add a floor lamp behind the sofa.

After that, assess the space and see if more needs to be done.

What arroyo said.

One option for the small pet housing would be to make a side table that also functions as a small pet housing.

I like the second pic, but I would pull the couch enough away from the window so that you could fit the little animal cage or whatever that is out of sight. It would still be easy for you and the animal to get to as well as provide light for them if they stay in the cage often.

Personally I think the green walls are fun. With white accents it would make it seem so bright and cheery.

I would also paint the TV stand white.