You don't need to devote an entire room to a work area, nor do you want to work in a closet. An area that can accommodate a 2' x 4' table might be sufficient, depending on your modeling needs. I planned mine to fit into the basement corner behind the stairwell forming an area about 10' long and 8' wide. Good lighting is essential. How much light depends on the size of your work area.
Fluorescent lighting is suitable for most applications and is inexpensive to buy and operate.
I hung three two-tube fixtures, one over each leg of the workbench, and a third one for general room light. Several electrical outlets should also be nearby. It's a nuisance to have to plug and unplug electric tools and appliances when only a single outlet is available. These are on separate breakers in the electrical panel so as not to interfere with the rest of the house circuitry. They are also tied to a GFCI outlet for safety.