This paper identifies the physical space design that could influence the Penang youths’ state of well-being positively. The objectives of this study to comprehend the relationship between the psychological influence of physical space and the state of well-being of youths in the youth institution to determine the relationship between physical space and its significance in perpetuating end users’ state of well-being of Penang youths and enlighten on the understanding of physical space design that is influential to the state of well-being of Malaysian youths. This analysis will look onto aspects of physical space, including design elements, physical condition, and space sufficiency in youth’s current living space such as choices of colours, presence of daylighting, utilization of indoor landscape, open spaces concept, ventilation, and sense of privacy. The finding of this study generally helps to enlighten the understanding of physical space design that are influential to the state of well-being of youths in Penang.