Your desire to brighten up the room and your husband's preference for a darker gray than City Loft are in conflict. The built-ins are a very warm color so they're not going to work with a gray in any case. Try picking a color out of the stone on the fireplace that goes with the built-ins. Since the room probably gets a lot of light you don't need to go too light. You might do better by choosing carpet first, keeping in mind what I already said about the shade. There are many shades of paint but you will have a much more limited choice of neutral colored carpet to choose from. Or were you going to put down wood floors?

As for the windows, if you don't already have a film on them, get that as a southwest exposure is a lot of light and it will bleach everything in the room over time. If you have a film you won't need any other covering on the top section.

Agree start with the flooring. There are lots of pf paint colors. BM Edgecomb Gray, Balboa Mist, Winds Breath and on and on

I would not put a carpet back in. I would either go all wood or a laminate flooring, where I can add an area rug. The area rug will bring in lots of color. From there you can pick your wall color.

First, I would remove the built-ins and the carpet.

Wood flooring, luxury vinyl is very durable and offer alot of color options. I would go with a medium tone, too dark shows dust, and too light would be too light for your room with so much natural light.

Thank you all for the feedback!

@Lyn Nielson - we considered removing the build-ins, but they were installed before the fireplace stone, so there is just raw drywall if they are removed, I don't know how likely it would be to find stone to match.

@njmomma - the adjoining rooms are all hardwood, is it usually possible to match the other hardwood just for this space? Its not in our budget to redo all the floors at this time. I do love the idea of an area rug - this may be way off but is there ever a scenario where it makes sense to put an area rug over carpet??

@jck910 thanks for the paint color suggestions! would you recommend anything to look for in carpet? I feel like I look at the fireplace and all i see is brown, brown, brown but don't want to replace with brown carpet again!

@kandrewspa The built-ins are a very warm color so they're not going to work with a gray in any case. - thank you I am building this same case :) We are planning to recarpet and repaint. Should carpet be lighter/darker shade than the walls or is there any rule around that? I haven't even thought about the carpet color yet but seems like I should start there. Also thanks for the suggestion on film - I didn't even know this existed and sounds like exactly what I need!

Merely a photo, but the ceiling looks stark in contrast - what about painting it a cooling soft blue-grey, related to furniture?

Or

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Mesa-Mixed Construction Cotton Poly Upholstery Fabric, Sorbet · More Info

Sometimes a cornice, etc. with enlarged pattern works out -

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Surah Misty Blue Fabric, 1 Yard · More Info

Does fireplace have a canyon rose - purple - grey?

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to talk about what color palette will be?

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Mesa-Mixed Construction Cotton Poly Upholstery Fabric, Fig · More Info

Yes it is very likely a professional could get very close to matching the rest of your home's floors. It is acceptable for them to be different. Take the color cues from your stone for the wall color, lightest in the stone is what I would suggest. I might consider removing the built in on the left and then letting the TV fill that space, but in the grand scheme removing all built ins to then buy furniture for those spaces if there is a budget concern seems counter productive. I have wall to wall carpet in two rooms and also a rug on top for color/interest. I see you have little ones. They will enjoy the hard surface for their wheeled toys but you need to consider what a hard floor will do to your acoustics, and breakage as things are dropped. It will get very loud in that large room w/o carpet!! I always say curtain panels finish a room, adding a hit of softness and color, perhaps even pattern. If privacy isn't an issue, then just dummy panels hung to frame the window gives the room that finished polished look. Most light kits on fans are a DIY swap. Given your high ceiling you want to keep the fan. There are some very kewl options in fans out there could be fun to go funky.

I would look at berber carpet

Is there anyway to revamp the old tv portion of the built-in to mimic the other side? Will you be completing the work yourselves? It might look nice to have two tall darker cabinets with opaque glass or mirrored doors flanking the fire place (hiding where the stone is missing). It would bring the focus to the fireplace and mantle and give you storage.

What a wonderful family space, and the fireplace is lovely! I am not a fan of the built ins, particularly the angled portion. At the very least, get them more symmetrical. Why is there a chair in the corner? Please tell me that no one climbs on it to retrieve items from the shelves. You have little kids, so this space (for now) feels like it should function for them too, so you can get stuff done in the kitchen while keeping half an eye on them. Kids are always on the floor, so choose something that will function and clean up with that in mind. The built ins give you great storage for games and toys. Open shelving invites clutter so maybe tweak them to hide the mess. And please get rid of the angled portion. For now, I would just remodel the built ins to make that wall look symmetrical and less cluttered, new carpet or flooring, and paint. Once the kids are older an you are using the room differently, you can refresh it to a more adult space.

Thank you for being clear about what has to stay, so I'm going to deal with your "givens," the built-ins and sofas.

--Is the current carpet in good shape and comfy for the kids? Of so, get it cleaned and leave it. It harmonizes with the fireplace, and kids live on the floor. You can get hardwoods when they're older.

--Choose a much lighter and warm cream/taupe wall paint that goes with the carpeting and stone. Sorry, honey. That will NOT be gray. Other Commentors will make some good paint suggestions, taking into account that you have a lot of outdoor greenery that affects paint choices In good natural light, take a close up of the carpeting if you decide to keep it. If you need curtains for privacy or to dim room, match them to the paint color--ceiling to floor length. Also need to take into consideration the kitchen area wall color. Can you show us that? (Always show all walls of an open space when asking a Design Dilemma.)

--Rethink layout to create TV conversational zone and a kid zone.

TV/Conversational zone: Move wider sofa to face the fireplace and the smaller sofa to face the great outdoors! It looks like nature is right there, so it's an extension of your living room. Don't block the great view! Move the smaller sofa against the wall so it creates an "L" with the wider sofa. Put a large, colorful, circular storage ottoman in the "L" or two colorful smaller storage ottomans. Some of the spillover of toys and such can go in there. Put tray(s) on top of ottomans when entertaining. The one below is kind of fancy, but there are lots of storage ottoman options out there.

Augusta Storage Ottoman, Crimson Red · More Info

--TV conversational zone.:Move TV to one of the built-ins since those are one of your givens. I'm going to say something sacrilegeous: Get a TV that fits in one of the built-ins.

--Kid zone. This will be a play area between the kitchen and the TV/conversational part of the space. Get open wood shelving, sofa height if possibl to go against long sofa. Get baskets for the kids' toys. The finish should be the same as your wood trim. You're sure to find bookshelves like that on Craigslist. Down the road, when kids are older, you can get a lovely sofa console cabinet to use as a buffet.

Lighting: Proportions will be important. Something in a wood finish but with modern lines would be great. Here's an article on measurements for different sized rooms, tall ceilings, etc https://www.lumens.com/how-tos-and-advice/how-to-choose-the-right-size-ceiling-light.html.

When you go to choose carpet, settle on a price point/quality level first. Then you will have maybe a dozen choices of neutrals to choose from. The store should be able to either give you a sample board to take home, or the store I go to has 9" X 5" samples of its most popular carpet to give out. If you weren't planning on replacing your sofa, you need to look at the samples against your sofa, built-ins and fireplace. There will probably be only one or two colors that work with all of those elements. The paint you choose should be darker or lighter than the carpet. If it's all the same color you get a white box/black box kind of effect which isn't appealing IMO. I would go darker on the carpet since you have children. You definitely don't want something too light.

Here is a recent design we did. Perhaps sharing it with you will help you with this dilemma. Please take note of the furniture used, paint colors, and various other decor items.

Mt. Washington Ski House · More Info

Mt. Washington Ski House · More Info

Mt. Washington Ski House · More Info