A lot of fans have argued that since Final Fantasy VII Remake is a full game, it is essentially the next main line game in the series. That is, Final Fantasy VII Remake IS essentially Final Fantasy XVI.
I can see why many people might believe that. We’re getting a new battle system with the latest hardware technology, and overall it looks to be the next evolution of Final Fantasy. The Final Fantasy VII Remake just happens to be a new Final Fantasy story and world we know. And in some sense, this is correct.

But alas, and thankfully, no, it’s not. No one at Square Enix has even remotely stated Final Fantasy VII Remake is the next main line game in the series, much less that it’s Final Fantasy XVI. And even if you aren’t being literal, that’s an extremely poor hyperbole.
Final Fantasy VII Remake has a lot of content, most of it padding, a lot of it filler and fetch quests. But just because it has enough content for a main line game doesn’t mean it is, nor does it make it so.
I think we’d be selling ourselves short if we’re going to assume a remake of a previous game is the next main line game.

Also, consider that the majority of Square Enix staff IS NOT working on the Remake. Square Enix has different teams that produce different titles. There’s a team working on new content for Final Fantasy XIV, a team working on mobile games, a team working with the Luminous engine, and other teams that programming miscellaneous titles. More than likely, Final Fantasy XVI is in pre-production. We aren’t missing out on anything hopefully, so there no reason to assume that Final Fantasy VII Remake is a new main line game.
Of course, this doesn’t mean that they aren’t devoting a lot of time and resources to a remake that has already taken time and resources away from development of Final Fantasy XVI. If Final Fantasy XVI is in pre-production, undergoing the conceptual stages, it’s because Final Fantasy VII Remake took time from its development. Unless you still think Final Fantasy VII Remake is essentially Final Fantasy XVI, then it’s a moot point.

Wouldn’t surprise me if they’re already well into development on Final Fantasy XVI, but I don’t actually believe they are. Square Enix is a little bit deliberate when working on games.
Remember, this is the company that announced Final Fantasy VII: Remake three years ago and scrapped everything when CyberConnect was no longer needed for the project. The specific team considering Final Fantasy XVI might be debating whether or not to reuse assets from Agni’s Philosophy. They might not actually be in the conceptual stages yet.
One team is making the remake. Yes. Still, staff and resources are allocated to where they need them. Budget consideration have to be made.
Either way, the team remaking Final Fantasy VII Remake would most likely be responsible for Final Fantasy XVI, if they didn’t have to do the remake.