We're renovating an old house and the only spot for the washer and dryer is in a second-floor closet (the basement has a tenant unit). What are the drawbacks to a compact laundry room?
My first choice would be to put it in the basement. However, unless your tenant will be washing your clothes, you need another solution. It's often difficult to find space for the laundry on the first floor, where high-traffic principal rooms occupy the prime real estate, though I have seen a single-sided laundry closet placed adjacent to the kitchen, close to the garage.
If you carve out a laundry niche on the second floor, remember two things: Laundry makes noise and it needs to be hung and folded. The room can be insulated to keep noise to a minimum, while the design must be efficient in storage and function. I suggest under-the-counter machines so that you can use the counter space for folding. Shelves above can accommodate baskets for supplies. A drying rack can be installed on the ceiling and stored out of reach when not in use. Look on the bright side: The scent of clean laundry and the gentle hum of the second-floor dryer will rock you to sleep.
The other option: dry cleaners.