According to a new recruitment ad, XVI's scenario and basic development is already complete. The team is currently looking for artist, environmental production, cutscene production assistants, and VFX artists. There was no indication of any release but the ad apparently mentions that the staff has been building the game remotely.

This seems like good news because it means the game is likely in the early stages of actual full development. To put this in perspective, despite being announced in 2006, Versus XIII hadn't even entered full development as late as 2011. It very likely didn't enter it until after Tabata's team took over and the game was rebranded. So that means XVI may very likely dodge the "released in 2035" scenario.