Has anyone in northern Illinois (or similar climate) installed a natural gas tankless water heater?

Does it work well with the water temperatures in the dead of winter?

The mechanical closet is really small, and  it would be nice to reclaim the space that my current 40 gallon HWH is taking up.

I also have pex installed in the slab that I want to connect to my HWH via a heat exchanger (to keep potable water separate from the hydronic water). 

Space savings would make room for piping and components as well.

Has anyone used a tankless HWH to supply house and heating water?

Note: the hydronic heat in the slab is used as a supplement to the forced air heat downstairs. Basically more of a luxury than a utility, so I don’t anticipate a huge hot water demand.