We propose using virtual reality (VR) as a design tool for sketching and simulating spatially-aware interactive spaces. Using VR, designers can quickly experience their envisioned spaces and interactions by simulating technologies such as motion tracking, multiple networked devices, or unusual form factors such as spherical touchscreens or bezel-less display tiles. Design ideas can be rapidly iterated without restrictions by the number, size, or shape and availability of devices or sensors in the lab. To understand the potentials and challenges of designing in VR, we conducted a user study with 12 interaction designers. As their tool, they used a custom-built virtual design environment with finger tracking and physics simulations for natural interactions with virtual devices and objects. Our study identified the designers' experience of space in relation to their own bodies and playful design explorations as key opportunities. Key challenges were the complexities of building a usable yet versatile VR-based "World Editor".