I could see streetcars playing a substantial role within many cities in the region, even Manhattan. The Regional Plan Association's (where I'm a Senior Fellow) Third Regional Plan recommended a Midtown light rail loop, which is essentially just a streetcar loop. Vision42 has been pushing for years for a Midtown light rail loop part of its plan to pedestrianize 42nd Street. Vision42 argues that light rail loop could be built at far less cost than the proposed #7 subway line extension while providing many of the same benefits in helping to improve mobility and galvanizing development on Midtown Manhattan's far west side.
As a "mode," to use a planneresque word, streetcars have a lot to offer. They are better than buses, which are the usual lower cost alternative, because they provide a smoother ride, even while traveling at higher speeds, and being more beloved by customers. One study showed that streetcars travel faster than buses, because drivers tend to defer to a train-like vehicle and get out of their way. As significant, they tend to attract more private development because rails in the street have a permanence that inspires confidence in commercial and residential developers.
Thanks to Aaron Naparstek