Smaller turning radius, therefore better suited to city architecture. Also, tunnels require less width.

I dont think that matters. The only time you care about existing city architecture is when youre building a tram. Most trams use standard gauge and that works fine.

Tunnel width does not depend directly on the gauge but on the loading gauge, i.e. the size of the car. That is generally wider than would be required by the gauge.

On the other hand, using the same gauge as other rail means you can run trains across both old and new infrastructure.