I have set up a sewing place in the kitchen. We live in a townhouse without any spare rooms to set up for specific tasks. Sofie was using this area to study.
There is a wasted space upstairs that we (We meaning my daughters) tended to use to dump stuff. We cleared that out and put a desk there for her. The same space has a sofa bed for visitors. Small homes need to have multi use rooms. This space is not fully enclosed, just an area at the top of the stairs:
So still plenty of more work to be done, but we have started. :)