The optimal design of structures and systems described by partial differential equations (PDEs) often gives rise to large-scale optimization problems, in particular if the underlying system of PDEs represents a multi-scale, multi-physics problem. Therefore, reduced order modeling techniques such as balanced truncation model reduction, proper orthogonal decomposition, or reduced basis methods are used to significantly decrease the computational complexity while maintaining the desired accuracy of the approximation. In particular, we are interested in such shape optimization problems where the design issue is restricted to a relatively small area of the computational domain. In this case, it appears to be natural to rely on a full order model only in that specific part of the domain and to use a reduced order model elsewhere. An appropriate methodology to realize this idea consists in a combination of domain decomposition techniques and balanced truncation model reduction. We will consider such an approach for shape optimization problems associated with the time-dependent Stokes system and derive explicit error bounds for the modeling error. As an application in life sciences, we will be concerned with the optimal design of surface acoustic wave driven microfluidic biochips that are used in clinical diagnostics, pharmacology, and forensics for high-throughput screening and hybridization in genomics and protein profiling in proteomics.