Sizing temporary facilities is a crucial task in construction site layout planning due to its significant impact on project productivity and cost. This paper describes a simulation-based approach for modeling the size of facilities that temporarily contain materials in construction projects. Different methods have been introduced for estimating the required size of this kind of facility; however, space limitations, particularly on congested sites, may not allow the planner to allocate the estimated space to the facilities. This study aims at quantitatively analyzing the impact of facility size on the project and modeling the managerial corrective actions to remedy the space shortage in facilities. To this end, a hybrid discrete-continuous simulation technique is adopted. Simulation is superior in modeling dynamic interactions between variables as well as modeling construction processes with inherent uncertainties. The combination of discrete and continuous simulation is used to enhance accuracy and model the project at both operational level (i.e., activity level with higher level of detail) to estimate production rate, and strategic level (i.e., macro level with lower level of detail) to account for some construction planning decisions such as material management variables. The novelty of this study is analyzing the impact of facility size on the project time and cost, while managerial actions taken to resolve space shortages are modeled, and interdependent influencing parameters of the different disciplines, such as site layout, material management, logistics, and construction process planning are integrated in a unified model. The applicability and suitability of the proposed approach is demonstrated in layout planning of a tunneling project site.