What the rooms dimensions?

11 feet 9 inches long and 6 feet 3 inches wide

Is your current water heater electric or gas? Tankless units of sufficient capacity to handle whole-house water heating require a very large electric circuit or gas feed. Retrofitting tankless to an existing electric tank *always* requires an upgrade on the electric circuit. Retrofitting gas often requires an upgrade on the gas line (sometimes even at the meter). My tankless is electric and is on a 120amp circuit (that's 4x more capacity than an electric dryer, and more than double what an electric range needs). It can pull 28,800 watts at maximum power output. Typically much less for a single hot-water task but the circuit MUST be able to supply maximum power when required.

My current water heater is electric. I have a plumber coming tomorrow. With what you've shared i might need an electrician first.

You have a great area there. I'd think about the amount of space you're going to dedicate for

laundry storage and working surface for folding or drying clothes. If you have an interest in hanging clothes to dry, there are some very clever hardware fixtures that drop down from the wall or hang on the ceiling

Pantry storage Chances are that you'll be able to free some space once the water heater tank is gone. I'd think about the amount and type of storage you would like for a pantry storage and shelving - do you have daily food, utensils, kitchen appliances, long-term food storage from discount stores? What size cabinets or shelving will fit in the room? 6' 3" width minus the depth of your washer and dryer and a decent walking space leaves how much room for a cabinet? Is there enough room for base cabinets with shelves above in the area beyond the washer and dryer?

The other thought I have is to consider buying or building shelves that have adjustible-height clips or "pilasters" (industry term) that allow shelves to be moved up and down. Pilasters are metal tracks that have mounting holes that would allow you to mount shelves or drawers, picture below. Google "shelf pilaster" to see a pic.