DD1 was 27 months old when DD2 was born. We live in a 2-bedroom condo, and had/have no thoughts of moving just because there's another baby. It helps from outsider's points of view (:rolleye) that they are the same gender.
DD1 has never been a cosleeper. Both babies slept primarily in a bassinet by my side of the bed till about 5-6 months. I started around 4 months putting baby down for naps in the girls room, in the crib, just to acclimate them. DD2 still wakes 2-4 times a night and I go in and nurse her in the glider. DD1 doesn't wake at all most times, but sometimes stirs a bit. We're in the beginning stages now of no-overnight-diaper, so I've been taking her to the potty in the middle of the night, and that's much more disruptive to her than the baby crying.
I think the older one can learn to sleep through the baby crying because it's a sound/noise/voice they are familiar with. It's not like baby only cries in the middle of the night, there's plenty of time for the older child to become familiarized with the baby's voice during waking hours.
I respond as quickly as possible, and am only 11 footsteps away from the crib, so that helps, too.
We use a sound machine and room-darkening shades in their room which seems to help them both.