A Little Residential Design on a Thursday Morning

I just started helping my dear friend configure the space of her UES studio.  Where to begin certain rooms when there are no walls, and how to create delineations yet a cohesiveness.  I definitely deal with the same issues in my own house, and I feel like it's a common conundrum in this city.  (Real estate in general is a class of its own here... 1.5 bedrooms anyone? 4th floor walk up?)  I suppose location really is the main driving factor of where people choose to live here, which makes for more people settling for interior spaces that they do not love!  Is this the key to being a successful designer here- knowing that fact?? For that reason, I'm very excited to help turn the space into a place my friend will enjoy both visually and functionally.
Schematic design to kick things off- our first ideas: