You can expand as far as you want. Most games you'll end up in the neighborhood of 5x5 so that's why the setup instructions ask you to leave at least that much space, but it's by no means a mandate.
Viewing post in The Locked Room Murder Mystery Game (Ashcan) comments
ohhh, okay it makes sense having played, but it wasn't as clear in the text. I also missed the part about how "blank spaces" don't count for movement till I read the other comment on this page. So generally the "journal" shape is created only as you add things to it, and you just always have to alternate clue and suspect. I think I got it.