The thing to remember in in a modular or mobile home, they are not covered by regular plumbing code, they have their own codes to follow, to put in a regular atmospheric vented water heater you will need to cut in combustion air vents to outside, the correct size and heights for the new heaters. Items like kitchen exhaust, bathroom exhaust laundry machines, and worst of all swamp coolers will suck the inside air and exhaust it, which is why we are required to have additional vents. The sealed combustion like the one shown get there air from the bottom air vent that the heater sits on.
Also that fact that it's very easy to put a door on that alcove. That's one reason they put a sealed combustion unit I'm there it's designed to be isolated with a cover.