I am not sure at what age they say a child can sleep safely in an adult bed, but if you have a queen it seems like there would be room for your 16 month old there.

Or you could get a smaller bed for yourself so you have room for another child sized bed.

Hi Elizabeth,
Could you try a side cot for your new baby, one that attaches to the side of your bed?

Would you want to co-sleep with your 16 month old? Could you raise your bed and sleep on a platform freeing up space under it?

@Denise Marchand Thank you! Just out of curiosity, how would you arrange this space when the newborn transitions to a crib-sized mattress? I am considering a twin-sized trundle, too.

Your room is too small for both a trundle and a crib. But you can get creative with space planning if you think outside the box.

Keep your queen bed in the same location as the first plan. If you are handy or know someone, build a bunkbed/tower over the full length of the window wall (intersecting the window) I did something like that for my son many many years ago and he loved it. You can "bump out" the tower over your queen bed and add cut-outs for windows. Here is a very old pic of my son in his tower. By the time your infant is ready for a crib, your toddler will have a blast going up there.

The crib is under the bunk (in green). Designing in NYC made me very creative with small spaces and multi purpose rooms! Anyway, you get the idea!

Inspiration pics:

Yes, think both high and low. If your current toddler prefers a cave-like bed, you could have that bed down low, mattress sitting on a nice carpet piece, with the crib built on a platform just a bit higher than normal. So, the small child's bed is under the crib of baby, with some kind of climb-up play area on top, above crib, if your ceilings are high enough. When the child is ready for a bigger bed, maybe they will want it up on the high level. By then, the baby may want the low level bed and the middle area can become the play space.

In the dorms in college, my soon-to-be husband's mattress was on the floor, half under his platform on which his desk sat, looking out the windows that were higher on the wall, almost like clerestory windows. Even people who do not like tight spaces will not mind their legs under a platform if their heads are sticking out from under it.

I recently got fabric storage cubes at Wayfair that are 12" x 12" and open at top. They sell wooden shelf units that make a grid for these fabric cubes. You can get ones with places for labels on the front. I am holding my off-season pajamas in one of these cubes and was surprised how much they hold. I bet this is the right size for baby clothes and supplies. Storage cubes with labels. The safest way to use these might be to use wall brackets to hold boards (fastened to the brackets, not just sat upon them) spaced for the use of these bins. I looked at Houzz for sets like this and theirs were all smaller bins 9x10x11 or so. Plus, you would have to attach the wooden cubical piece with an anti-tipping device to the wall to protect it from the toddler, so doing the wall shelves may be easier than rigging all that up. Plus, you can use the larger cubes. Later, without the cubes, you simply have shelves! This system means buying 1 x12 planks (many places will cut them to length for you), brackets, sandpaper and paint or other finish without having to buy a piece of furniture.

Some relatives of mine have bunk beds that are sized to fit crib sized mattresses. They use them for children aged four and six (but petite). Maybe an option for when baby outgrows a crib, if you're still in this room by then.