as long as the space was utilised well it wouldnt put me off.
dd2 nursery had a large play area but it was shared with the neighbouring state nursery, so they both benefitted from it. her previous nursery had a play area about 1/3 of the size and it was used well.
My dd1 attends a nursery which has 20 children. It is a small nursery generally and does not have it's own outdoor space/garden. They do have a very big indoor hall for large equipment bikes etc and a play park right next door to the nursery. They go to the park every day when it's good weather and take the children for a walk whenever it's dry.
Having no outdoor space isn't ideal but hey the nursery is perfect in every other way. Dd is 3.8 and goes for 2.5 hrs(funded place)
Katymac - the day nursery that Dd1 went to is on a main road. It has 3 off road parking spaces which are usually taken up by the staff. The parents pavement-park on the main road, take their child(ren) out on the 'safe' side of the car and into the nursery. Its not unusual to have little or no space. The maximum number of children allowed in the nursery is 57! Oh and btw the building that its in was a church!
We had DD's name down for two nurseries (for a very good reason, slightly long story) and the one we didn't use in the end had a very small outdoor space - 12' by 25' or something like that? It obviously didn't entirely put us off, but I was glad to be able to use the other place, which has a large domestic garden, perhaps 80' long. The place we didn't use was entirely tarmacced (sp?!) over, or rather it was that rubbery stuff, and seemed like a bit of a suntrap. When DD was tiny especially I liked the idea of her sitting a blanket on the lawn under a shady tree (which current nursery has) rather than being in a mini-school-playground.