Could you instead split the space down the middle to create two separate rooms: one for laundry / utility closet and one for guest bathroom? I find combined bathroom / laundry rooms awkward to use (both for bathroom needs and laundry needs) and it seems like you have sufficient room to make them separate.

Actually, I was considering somehow including our storage pantries and desk space in the space. I'm just not very good with spatial planning. The squares represent 6". The door on the bottom right is the main door we use from the garage. Ideally, we would love to have a door to the backyard someplace.

Can you sketch the surrounding rooms so we can get an idea of the possibilities?

But yes, it’s ok to have a laundry closet in a bathroom. I have it and guests never even know there is laundry there because the doors are closed. I’d rather have it that way than have guests walk through a laundry room to get to the bathroom. But I’d prefer an entirely separate bathroom and laundry room.

This is our proposed layout. We begin construction on 8/6.