Any appliance with a burner needs combustion air. If this is in an area where things can freeze, it becomes tough in an unheated compartment. Providing adequate air may mean in between firing, things can get cold enough to freeze. Some tankless systems have antifreeze programs that will turn them on to prevent them freezing up. But, this may not protect the inlet and outlet pipes. A tank has a large volume of heated water, and will turn on to keep it at the desired temp. A tankless has essentially no water heated in side it unless there is a call for heat, or it activates its antifreeze program. The thing may work, but it will be firing fairly frequently if the area is cold, even when you aren't calling for any hot water.
For maintenance, normally, you'd want more space around the thing.