The indoor public spaces of most elderly facilities in China have a monotonous space form, which, thus, causes low comprehensive performance and is less likely to satisfy participants’ various requirements. This study proposes an optimization design method of “In-Between Area” for a space form operation to improve the performance of indoor public spaces. First, two models were established: Model A to reflect current indoor public spaces and Model B to represent the indoor public spaces designed by using the “In-Between Area” method. Second, a walk-through video was created from each model, with a duration of 196 s. Subjective assessment (STAI) data and objective physiological data (HRV and EEG), were collected from 40 participants while they were watching walk-through videos. The comparison analysis showed statistically significant differences between Model A and Model B. The results of STAI, HRV and EEG proved that the “In-Between Area” method, as an optimization design method, created a more pleasant and comfortable environment for the elderly and improved the overall efficiency of the indoor space.