My first thought was "Why not? Of course you need a dedicated workout area!"
But then I realized I don't know what kind of workouts you do. Do you have a lot of freestanding equipment that may further cut into the space? I sometimes find it more frustrating to not be able to do the full move.
I use my small spare bedroom as my yoga room. I don't need lots of space. I keep the props in a box (or try to). The weights, step, and bike are in a finished area of the basement.
So I guess it depends on just how small the room is, and what kind of workouts you want to do. I hope you can work it out because it's really nice not having to put your stuff away.