First, I would paint it another color. It is a lighted space, so do glass shelving.

The entire hallway will be painted BM edgecomb gray, are you thinking that the niche should be a different color?

It looks like it would work for floating shelves, but you could also put pantry doors on it and use it for closed storage.

I'd add some shelves with either studs and gypsum board or glass. Don't forget some accent lighting if possible.

If there is light above, glass shelves would be very nice. But without light, I would put a door on it and simple shelves inside for storing seldom used items. What were they thinking. Sure didn't know anything about wine! It is so deep, I would be tempted to put a false wall at the back and reduce the "visible" depth to about 12-14". then behind it have a safe and keep valuables there out of sight. It wouldn't be easy to get into it but you would put items you don't use often. That might work.

Another option might be to do a door and cabinet on the lower portion, with a nice perhaps wood or granite top and glass shelves above. Perhaps some glassware and make it a little "bar area".

BM fantasy blue with glass shelving would be beautiful. With the over head light on, that small space would glow.

Interesting space! I like InHowzer's photo, very nice! I agree about a lighter color maximizing the space too. Definitely its own color, then it becomes its own secret, surprising little nook. If it was me I'd just put a custom built shelf in their for books but that's only because I lack space in general.

You could make it sort of zenlike (or whatever style that suits you and the rest of your space) and place an ornate table and a tabletop fountain on it for example. Something like this? If you have light coming from other directions you could put some plants in there too. If you are crazy about plants like I am, you can even install grow lights in there.

$59.98 Overstock tabletop fountain, $59.99 Amazon table