I think I understand what your builders concerns are. With the L-shape design you are loosing the windows and elongated laundry room is not giving you that much extra storage. Is there a reason why the formal dining isn't converted ? The reason, I ask is because, the current formal living room has better access to the kitchen, so it is better suited to be the dining room. Just a thought. I would suggest doing something more along the line of what your builder is suggesting. Here are two options: I saw this setup of laundry at a house and I think it works well. you can use the space on the right wall as folding table or storage cabinet. The door is on the left wall. The door way from dining room should be symmetric. In this case the view is the wall where you can put art work, or even create a art niche. I would suggest Art Niche with sconce. Instead of walk-in pantry, a long reach in pantry may work better if the space is tight. In this option you have more storage but no window. In option 2, I moved the pantry in the laundry room and created a wet bar instead. The main idea is to have window to the space has natural light. You can just have more storage or even two small pantry closets with a big window in the middle. I do think that a wet bar or butlers pantry makes more sense, and creates a logical transition from kitchen to dining. Of course without dimension it is hard to tell if any of these will work. I do think that, trying to create two rooms may end up wasting lot of space. option 1:

The distance between the interior edge of the door opening and the wall corner is a little under 17" I do think the cabinet guy could build over the molding. I just wonder how that will really LOOK, with the cabinets overlapping one entire side of the door, and squeezed right up next to you on your left as you enter. But it is definitely a possibility. I don't want exposed shelving, as the laundry room does a fair bit of unattractive storage, so that just defeats my purpose of prettying-up this room. While I'm not totally opposed to a broom or two being exposed, I do want the vacuum cleaner hidden. And at that point, I should have a tall door I can hang the broom inside of. Sigh. Why are the smallest spaces always the hardest!?

I agree with the folks above about turning the area into a closet where the units sit side by side. I lived with mine stacked for 16 years and was never happy with it. I disliked having to empty the dryer and carry the laundry to the adjacent kitchen or family room to fold. I realize that is not a startling problem to have in life, but if you can make it work for you in a way that will make you happy-go for it.

bpath, Thanks for your comments. The reason the tall cabinet is in between the washer and dryer is for ease of putting the dirty clothes in the washer. The washer is on the left (door hinges on the right) and the dryer on the right. There is a drawer (shelf) that pulls out to put the laundry basket on to transfer the wet clothes to the dryer. I will have a large sewing room for ironing. I will have some cleaning supplies and other things in the laundry room. I will also have a storage room for larger items and a furnace and mudroom. Thanks again