you would need to know your local market to answer. those are quite small, but is the market hungry for 3BR and tired for 2BR? if you admit one is an office (I presume because no closet), does the other really qualify as a bedroom sufficient to be one of two? will the kid with 8x8 really be happy? can you build a loft to make more usable space in one or both?

In some areas a bedroom has to have a closet to be considered a bedroom in a real estate listing. Are you in a cape - do you have bedrooms on the first floor as well?

That is far too small to do anything but DETRACT from the value. Kids can share. 16x12 isn’t that “large” to begin with.

Requests for own bedroom is a real dilemma. I think a 3 bedroom is more desirable especially for office/extra bedroom. Think Orient Express bunkbed against one wall with built-ins all around.

8x8 would not be a legal bedroom in my location. We don't need a closet but it needs to be 80 square feet or 8x10. It has to be at least 8 ft in one dimension.

In the 1950s -60s they would do rooms with an accordian wall down the middle. This might work to divide the room into two some of the time, and it would be easily removable for resale.

https://woodfold.com/accordion/residential/

Yes, by dividing that room, you are left with very small spaces.

That said, I’m on the same page as Pal. Google temporary walls. Lots if idea on how to divide the space for as long as you live there.

Is there any way that a part of the hallway, or part of the other bedroom, can be used to enlarge the bedrooms or provide closet space? A floor plan might help us give you ideas.

How old and what gender are your kids? Some ideas will surface if we have more info. Is the office a necessity or just a thought you had? Can we see a floor plan?

A local real estate agent is really the only person who can answer the question about whether this will negatively impact resale value.

As far as whether your kids would prefer 2 small rooms to one large shared one, I think you wouldn't be posting this question if they didn't want it.

Walls take up space so your 8' is going to shrink down to +/- 7'9". Bedrooms have to have a window. Would both rooms each have a window? Don't forget the space that gets killed by the door swing. And the closet.

8' x 8' is the size of 2 sheets of plywood; prison cells are usually 6' x 8'. 8' x 8' could be called a deluxe prison cell.

Where we are, a bedroom has to be at least 80 sf and there needs to be an egress window. Check your local building codes before attempting this. You could, instead, simply hang a privacy curtain down from the ceiling.

Those are extremely small rooms.

I wouldn't permanently divide the rooms but would look into the kind of semi-permanent room dividers that are used in New York City where a portion of a living room is "walled" off to turn into a small bedroom.