"necessary" is up to you. I don't have a cyclone, just a 2HP single-bag DC and it is pretty darn loud. I don't have a big compressor, just your basic PC pancake compressor, and it is possibly louder than my DC.
With a shop the size of yours, I would certainly give some thought to walling off the DC+Compressor in a closet. I've seen it done in many other shops posted here and on other forums, and it really seems like a good idea.
...art