There are tremendous benefits regarding having a dedicated office space in a professional location. A professional office space likely allows for greater focus and productivity. Most people will find that working at home allows for easy distractions.
More than just a way to maintain focus, a professional office space shows commitment to an idea in the mind of customers, investors, and other stakeholders. Vendors and customers often take comfort in the fact that a company has a physical presence. Small details such as a formal mailing address adds an heir of legitimacy to a business.
For a start-up with limited resources a communal office space or flexible office space might be a good compromise. Office space at an incubator or a building focused on housing start-ups allows an open exchange of ideas with other like-minded companies. Start-ups can draw inspiration in a communal environment, full of early stage, high growth companies.