If Shrek is leaving, they could fit a good-sized dark ride in that space. I'm not sure how much space Potter will take up, but here's how much space they could use if they're willing to replace Cartooniversal and rearrange the WaterWorld backstage:
They could fit a good-sized dark ride to replace Shrek. If they're willing to replace Cartooniversal with a smaller store and rearrange the backstage area of Water World, they could make it work. Besides, they could have taller buildings towards the entrance of the park to enhance the "New York" feel of the area.