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Innovations in today’s energy grids are mainly driven by the need to reduce carbon emissions and the necessary integration of decentralized renewable energy sources. In this context, a transition towards hybrid distribution systems, which effectively couple thermal and electrical networks, promises to exploit hitherto unused synergies for increasing efficiency and flexibility. However, this transition poses practical challenges, starting already in the design phase where established design optimization approaches struggle to capture the technical details of control and operation of such systems. This work addresses these obstacles by introducing a design approach that enables the analysis and optimization of hybrid thermal-electrical distribution systems with explicit consideration of control. Based on a set of key prerequisites and modeling requirements, co-simulation is identified as the most appropriate method to facilitate the detailed analysis of such systems. Furthermore, a methodology is presented that links the design process with the implementation of different operational strategies. The approach is then successfully applied to two real-world applications, proving its suitability for design optimization under realistic conditions. This provides a significant extension of established tools for the design optimization of multi-energy systems.