It sounds like this area could be used for many things you have in mind. Pick one or a combination of two that you need the most and use the space for that.

Do you need a dining table there? You didn’t mention where you’ll be eating, and we want to make sure you can eat comfortably somewhere. Assuming dining is taken care of elsewhere, then based on what you said you need I’d probably put a corner desk with bookshelf hutch in one corner, and use the opposite wall/corner for larger toys, a toy box, and/or children’s bookshelf.

It all depends on what best suits your needs, but I can think of nothing sweeter than to set this up as a reading nook, with a bookcase, comfy chair and reading lamp, where you can hold and read to your toddler. How delightful it is to be introduced to books at a very early age!

Perfect office area. A reasonable size desk and a filing cabinet with bookshelves over both would fit. Small printer on a rolling cart or on top of the filing cabinet.

Not sure if you would want to build in permanent changes/ improvements to this space , but I suppose the inspiration pic. I am sending could be accomplished / simulated with free-standing office type furniture , as well. Keeping in mind you can always make a cozy reading corner in your child’s bedroom ( with a comfy chair and bookshelves ), but you would probably not be incorporating an office/library /display space in your toddler’s bedroom ;) , I think this space would better serve you like this. The sizes and configurations look very similar, too. Hope this will help to generate some ideas for you. Best of luck.

BTW, as far as investments go , I think most potential buyers ( years down the road ) would love having a dedicated space like this , and you would definitely see a return on your investment.

We think it's a great spot for an office:

I would've loved a play spot near my kitchen when my kids were young. Play kitchen, kid table and chairs, bookshelves. Could change with age to craft area. Just depends on your current needs.

Pu doors on it and create a pocket office.