It has been a difficult environment for mall operators in recent years. Even before the pandemic, mall-based retailers were struggling to compete with e-commerce. One solution to the problems facing malls is to repurpose vacant spaces for other uses.

One potential use is microfulfilment centers, which would serve as places where e-commerce and omnichannel retailers could fulfill online orders closer to their customers' locations. In this Nov. 17 Fool Live video clip, two experts from The Motley Fool's real estate brand -- Millionacres real estate analyst Matt Frankel, CFP, and Millionacres editor Deidre Woollard -- discuss why this could be such a big deal for mall REITs and their investors. 

Deidre Woollard: Yes. But I thought it was interesting though on the earnings call with Simon (NYSE:SPG), they didn't really say yes or no as far as their Amazon (NASDAQ:AMZN) fulfillment Center deal, I think David Simon said that there was no deal signed or something like that, but I'm wondering if that's going to become a factor as well.

Matt Frankel: I think you're going to see micro fulfillment centers spring up all over the place. Simon's malls, Taubman's (NYSE:TCO) malls, all these malls. Everyone has a half vacant mall in their town, I certainly do. You're going to see some of that space being repurposed because Amazon and other e-commerce retailers can get it cheaply. You're going to see shopping centers, store fronts become micro distribution centers. I think that's going to be a big long tailed trend to do physical retail. I think it's one that investors are really not considering when you think about the investment thesis. A lot of people think, when all these mall based retailers slowly go out of business, that's just going to leave vacant space and things like that. But companies that have a really forward thinking management team like Simon's, they're going to reposition that space. You've already seen them reposition things into, they have hotels in their malls now, they've entertainment venues. Simon's really good about bringing retailers that historically are only online, and convincing them they need an online presence. UntuckIt has stores in Simon's mall and that was historically an online retailer, just to name one example. They're really innovative when it comes to filling space. I don't think that's going to change anytime soon. Like I said, I think micro distribution centers for Amazon and other retailers are going to be a big trend going forward.

Deidre Woollard: What do you think about what this means for, you mentioned Tanger Outlets (NYSE:SKT). What do you think that this means for outlets in general? Because I feel like one of the things that has been hard for outlets, is that they haven't been prepared for e-commerce, the same way the outlet model. Is it necessarily conducive to e-commerce? So a lot of outlets sort of just didn't really focus on that. So this should be good news for them.

Matt Frankel: It's tough to do outlet retail profitably with e-commerce. The same reason that Costco's (NASDAQ:COST) business model wouldn't work as an online shift to consumer model, because the economics of discount retail don't make sense like that. But Tanger Outlets is doing a good job of trying to incorporate some sort of e-commerce into their properties. They do their virtual shopping. The virtual shopper that they rolled out during the pandemic, they say they are pleased with the results. Outlet shopping is kind of a treasure hunt aspect that brings people to the outlets. My parents go to Myrtle Beach because we're in South Carolina. My parents go to Myrtle Beach every few months and the first thing my mom does is go to Tanger Outlets. It's because it's stuff that she can't find online. She can't find at the local malls, things like that. Tanger reported that its foot traffic through its outlet properties is virtually identical to last year's level. That is extremely impressive given what's going on in the country right now. It was like 99 percent of comparable 2019 levels, walking through its properties. That is incredibly impressive for a retailer in 2020. Simon doesn't release those numbers and I bet you, it's because they're not at 99 percent of 2019 levels in their malls. Tanger's outlets are pretty much open air, which is great. People feel more comfortable in open air situations right now, for obvious reasons. Their properties are very conducive to getting people in there quicker than indoor shopping malls. Don't forget that Simon is the biggest mall outlet operator, so they are not just about their Class A malls. Anything that's a premium outlets property is a Simon property. So that's also worth noting. They're by far the dominant player. Tanger's the pure play, but Simon is the dominant outlet player.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.