Why not go work in cities that don't mind building vertically and having mixed use zoning? A lot of people like urban living.
Anyway our team is 3 right now, we use the lounge room and large TV for meetings and stuff, the office is mostly heads-down space and storage. The last company I started here in China about 8 years ago was in a similar (ground floor, 3 bedroom) apartment, and we had something like 10 people at times. Never any complaints. I lived there too initially, but moved out to dedicate the space to the company after awhile.