<PAGE>

                                                                   EXHIBIT 10.25


                    Employment Agreement for William Hewitt

     This Employment Agreement (this "Agreement") is made and entered as of the
1st day of January, 1999, ("Effective Date") by and between CenterTrust, Inc.
and CT Operating Partnership, L.P. (collectively the "Company"), and William
Hewitt ("Executive").

     The Company and Executive previously entered into that certain employment
agreement dated as May 1, 1998 (the "Prior Agreement"). The parties agree that
the Prior Agreement (except for the terms of Paragraph 8 thereof regarding the
granting and vesting of certain Restricted Stock) is terminated as of the
Effective Date.

     1.  Positions and Duties.  The Company hereby employs Executive as the
         --------------------
Senior Vice President ofLeasing and Operations during the "Term of Employment"
(as hereinafter defined) of this Agreement, with powers and duties consistent
with such position, including the management of the leasing and operations of
the Company's properties and such additional or different duties as may be
required by the President and/or the Board of Directors (the "Board") of
CenterTrust, Inc. ("Duties").  The Duties shall be generally performed at the
offices of the Company where located from time to time.  In addition, the Duties
may be performed by Executive from time to time on a temporary travel basis at
such other locations as Company shall reasonably request consistent with its
reasonable business needs.  Executive shall report to the President of the
Company and to the Board.  Executive shall be employed full time and shall
devote such time, attention, and energies to the business of the Company as are
reasonably necessary to satisfy Executive's responsibilities and duties
hereunder.  Executive shall use his good faith best efforts to promote the
Company's products and services.

     2.  Term. The term of this Agreement will commence on the Effective Date
         ----
and shall continue until December 31, 2000 (the "Initial Term") unless earlier
terminated as provided in Section 9. At the expiration of each year of the
Initial Term and each anniversary thereafter, the term of this Agreement shall
automatically be extended for an additional one year (the "Extension Term")
unless either party shall have given written notice to the other party at least
sixty (60) days prior to the end of the Initial Term or the Extension Term, as
the case may be, that it does not desire to extend the term of this Agreement.
During any Extension Term, this Agreement may be earlier terminated as provided
in Section 9. References herein to either the "Term" or the "Term of Employment"
of this Agreement shall refer to both such Initial Term and any Extension Term.

     3.  Salary.  Commencing on the Effective Date, and for the duration of the
         ------
Term of Employment, the Company shall pay to Executive a fixed annual salary in
the amount of Two Hundred Fifty Thousand Dollars ($250,000) per year, payable in
equal installments, no less frequently than monthly, in accordance with the
Company's prevailing payroll policy (the "Fixed Annual Salary").  The Fixed
Annual Salary of Executive shall be reviewed on an annual basis and may be
increased, if appropriate, on an annual basis.

     In addition to the Fixed Annual Salary, Executive may be eligible for a
bonus (the "Bonus"), at the sole discretion of the President and the Board or
any compensation or similar committee thereof. Any Bonus may be based on the
Executive's management of the leasing and operations of the properties of the
Company and the success of the leasing program, as well as other factors
determined by the Company in its sole discretion from time to time. Any Bonus,
to the extent awarded by the Company at the end of each fiscal year, shall be
earned and paid on an annual basis in accordance with Company practice. The
amount of Bonus for the calendar year ended December 31, 1999 paid to Executive
shall be based on several factors at the discretion of the Company which shall
include the substantial achievement of the goals (e.g. completion of the
recapitalization program, achieving stated FFO targets, etc.) set forth in that
certain Business Plan dated as of July 9, 1999 and may include such other
factors related to Executive's performance and that of the Company and the Board
deems appropriate. For the years after 1999 the Company may pay Executive a
Bonus in an amount to be determined by the Company in its sole discretion.

     Any Bonus, to the extent awarded by the Company at the end of each fiscal
year, shall be earned and paid on an annual basis in accordance with Company
practice.


     4.  Expenses. In accordance with Company policies, the Company will
         --------
promptly reimburse Executive for all reasonable travel and other business
expenses paid or incurred by Executive in the performance of his duties
hereunder. The
<PAGE>

Company shall promptly reimburse the Executive for all reasonable expenses
incurred by the Executive with respect to professional memberships and
continuing education upon evidence of receipt in accordance with Company
policies.

     5.  Incentive Compensation. As a further inducement to Executive, the
         ----------------------
Company has concurrently herewith entered into a Restricted Stock Agreement with
Executive whereby it grants Executive Fifty Thousand (50,000) shares of
Restricted Stock of the Company (as defined in the Restricted Stock Agreement)
(the "Incentive Stock"), subject to certain vesting requirements.

         The vesting requirement is that at the end of each calendar year, upon
the date that the Board of Directors determines the Bonus as set forth in
paragraph 3 above, the Board shall make a determination as to the success of
Executive in reaching corporate goals and based upon such determination the
Board in its sole discretion shall approve the vesting of up to one third of the
Incentive Stock as it deems appropriate ("Performance Vesting Component").

         Notwithstanding anything to the contrary contained in this Agreement,
regardless of the failure of Executive to satisfy the Performance Vesting
Component, one hundred percent (100%) of the Incentive Stock shall be fully
vested on the last day of the seventh year subsequent to the Effective Date
provided that the Executive is employed by the Company on such date.

         Dividends on the vested and unvested Incentive Stock shall be paid to
Executive on that date when dividends are paid to shareholders.

         The Company and Executive agree that in consideration of entering into
this Agreement, the 100,000 stock options issued to Executive pursuant to the
Prior Agreement are hereby cancelled and of no further force or effect.


     6.  Executive Benefits. During the Term of Employment, Executive shall be
         ------------------
entitled to the following benefits (collectively, the "Executive Benefits"):

         (a) Executive shall be entitled to vacation benefits in accordance
with the Company's normal vacation policies.  Such vacation shall be taken at
such time or times during the applicable year as may be determined by Executive
subject to the Company's reasonable business needs.

         (b) Executive and his eligible dependents shall be included in group
hospital, surgical, medical and dental benefit plans of the Company in
accordance with Company policies.

         (c) Except as otherwise provided herein, Executive shall be entitled
to participate in any profit-sharing, stock option, pension, 401(k) plans, or
other plans, benefits or policies generally available to other currently
existing officers of the Company on the terms generally applicable to such
officers, if and to the extent that Executive is eligible to participate in
accordance with the provisions of any such plans or benefits; provided, however,
                                                              --------  -------
that any such benefits or plans are not duplicative of those provided in this
Section 6.  Nothing in this Section 6(c) is intended or shall be construed to
require the Company to institute any plan or benefits, or to maintain or refrain
from amending or terminating any such existing plan or benefits.

         (d) The Company shall provide Executive with an automobile allowance of
five hundred dollars ($500) per month.

     7.  Reserved.

     8.  Reserved

     9.  Termination.
         -----------

         (a) The Company shall have the unilateral right, at its election and
in its sole discretion, to terminate Executive's employment at any time during
the Term of Employment so long as "good cause" (defined below) exists.  Should
the Company terminate the Term of Employment in accordance with the "good cause"
provisions of this Section 9(a), notwithstanding anything herein to the
contrary, the Company shall pay to Executive only his Fixed Annual Salary
through the

                                       2
<PAGE>

date of termination, any bonus which Executive has been awarded as of the date
of termination but which has not yet been paid to him and any other vested
benefits or rights. All other benefits provided for in this Agreement and
compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. For
purposes of this Agreement, the Company shall have "good cause" to terminate the
Executive's employment hereunder upon a finding by the President of the Company
or the Board that the Executive has (1) engaged in acts or omissions with
respect to the Company which constitute intentional misconduct or a knowing
violation of law; (2) personally received a benefit in money, property or
services from the Company or from another person dealing with the Company (in
excess of de minimis amounts) in violation of applicable law; (3) breached his
confidentiality covenant with the Company; (4) breached his fiduciary duty of
loyalty to the Company under applicable law; (5) engaged in gross negligence in
the performance of his duties to the Company; or (6) failed to satisfactorily
perform services for the Company which have been reasonably requested of him by
the Board or the President of the Company and which are consistent with the
terms of the Agreement; provided, however, that "good cause" shall not exist
                        --------  -------
with respect to items (5) and (6) unless and until the Company provides the
Executive with (a) at least fifteen (15) days prior written notice of its
intention to terminate his employment for good cause, and (b) a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which the finding of good cause is based. If the Executive cures
the acts or omissions on which the finding of good cause is based during the
fifteen- (15) day period, the Company shall not have good cause to terminate the
Executive's employment hereunder. Notwithstanding the forgoing, no notice prior
to "good cause" termination shall be required from the Company to the Executive
with respect to items (1) through (4).

          (b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Company may be
terminated by the Company at any time, for any reason, with or without cause,
without liability except with respect to the payments provided for by this
Section 9(b).  Accordingly, the Company shall have the right, at its election,
to shorten the Term of Employment without "good cause," cause of any kind, or
for any reason or no reason whatsoever, by giving Executive at least thirty (30)
days written notice of its intention to shorten the Term of Employment in which
event the Company shall pay to Executive, in cash, in equal payments (not less
than monthly), a sum equal to twenty-four (24) months of the Executive's Fixed
Annual Salary and two years of Bonus payments (deemed for this purpose to be two
times the prior year's bonus), less withholding for applicable taxes In
addition, the Incentive Stock granted pursuant to Section 5 above shall
immediately and fully vest as follows: In the event that Executive's employment
is terminated under the provisions of this Section prior to the last day of the
first year subsequent to the Effective Date, 100% of the Incentive Stock shall
fully vest without condition; during the second calendar year subsequent to the
Effective Date, two- thirds of the Incentive Stock shall immediately vest
without condition; and during the third calendar year subsequent to the
Effective Date, one-third of the Incentive Stock shall immediately and fully
vest without condition; after the last day of the third calendar year there
shall be no vesting of the Incentive Stock.  In the event that the Executive's
employment is terminated after the completion of a calendar year but before the
Board has determined the appropriate vesting of the Incentive Shares pursuant to
the Performance Vesting Component set forth above, the Executive shall
immediately vest in one-third of the Incentive Stock representing the
Performance Vesting for the prior calendar year.   Further, any Options  and
Restricted Stock other than the Incentive Stock then held by Executive  shall
immediately and fully vest without condition.  All other benefits provided for
in this Agreement and compensation payable in this Agreement shall cease on such
date of termination of employment except to the extent accrued as of such date.

          (c) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to terminate the Term of Employment in the event of the "Company's Material
Breach," which shall consist of the Company's failure or refusal to comply with
a material term of this Agreement.  The Company and Executive hereby agree that
the following shall constitute a "failure or refusal to comply with a material
term of this Agreement": the Company's failure or refusal to comply with the
provisions of Sections 3, 4, 5, or 6 hereof unless such failure or refusal to
comply arises out of a bona fide dispute.  In order to terminate the Term of
Employment, Executive shall be required to give written notice specifying the
claimed breach and the Company shall have failed to correct the claimed breach,
if such breach is curable, or alter the objectionable pattern of conduct
specified in the applicable written notice, thirty (30) days (ten (10) days in
the case of a breach based upon non-payment of compensation due under this
Agreement) after the receipt of the applicable notice. Executive shall also have
the right to terminate the Term of Employment in the event of (i) any removal of
Executive from the office of Senior Vice President of Leasing and Operations
without good cause (as defined in Section 9(a)) and without Executive's prior
written consent, or (ii) any material decrease in Executive's authority or
responsibilities as Senior Vice President of Leasing and Operations without
Executive's prior written consent, or (iii) a "Change of Control" (as defined
below).Should Executive terminate the Term of Employment in accordance with the
provisions of this Section 9(c), the Company shall pay to Executive, in cash, in
equal payments (not less than monthly) , a sum equivalent to twenty-four (24)
months of the Executive's

                                       3
<PAGE>

Fixed Annual Salary and two years of Bonus payments (deemed for this purpose to
be two times the prior year's bonus) less withholding for applicable taxes. In
addition, the Incentive Stock granted pursuant to Section 5 above shall
immediately and fully vest as follows: In the event that Executive's employment
is terminated under the provisions of this Section prior to the last day of the
first year subsequent to the Effective Date, 100% of the Incentive Stock shall
fully vest without condition; during the second calendar year subsequent to the
Effective Date, two- thirds of the Incentive Stock shall immediately vest
without condition; and during the third calendar year subsequent to the
Effective Date, one-third of the Incentive Stock shall immediately and fully
vest without condition; after the last day of the third calendar year there
shall be no vesting of the Incentive Stock. In the event that the Executive's
employment is terminated after the completion of a calendar year but before the
Board has determined the appropriate vesting of the Incentive Shares pursuant to
the Performance Vesting Component set forth above, the Executive shall
immediately vest in one-third of the Incentive Stock representing the
Performance Vesting for the prior calendar year. Further, any Options and any
Restricted Stock other than the Incentive Stock then held by Executive shall
immediately and fully vest without condition. All other benefits provided for in
this Agreement and compensation payable under this Agreement shall cease on such
date of termination of employment except to the extent accrued as of such date.
In the event the Company elects to not renew this Agreement as specified in
Section 2 above and Executive elects to terminate his employment with the
Company within 60 days of receipt of such notice of nonrenewal, such termination
shall be deemed to be a termination pursuant to this subparagraph (c) and
Executive shall be entitled to the severance benefits set forth in this
subparagraph (c).

     "Change of Control" shall mean an event whereby Executive does not remain
as an executive officer of the Company and associated therewith:  (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
Western Retail, LLC or LF Strategic Realty Investors LP. or their affiliates
(collective, "Lazard Entities") or any employee benefit plan maintained by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transactions where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) ceased for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.


         (d) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to shorten the Term of Employment for any or no reason, other than due to
Company's Material Breach, by giving the Company at least sixty (60) days
written notice of his intention to terminate the Term of Employment.  Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 9(d), the Company shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.

         (e) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, the Term of Employment shall terminate
automatically upon Executive's death or upon Executive's physical or mental
disability or infirmity, which in the opinion of a competent physician selected
by the Company, renders the Executive unable to perform the essential functions
of his position under this Agreement for more than 90 days in any 180 day
period.  Upon the termination of the Term of Employment in accordance with the
provisions of this Section 9(e), the Company shall pay to Executive (or, in the
event of his death, his designated beneficiary or estate) only his Fixed Annual
Salary through the date of termination and any

                                       4
<PAGE>

bonus which Executive has been awarded as of the date of termination but which
has not yet been paid to him. All other benefits provided for in this Agreement
and compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date.

          (f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Company belongs to the Company and shall be
promptly returned to the Company immediately upon the termination of this
Agreement.  Upon the termination of Executive's employment under any subsection
of this Section 9, Executive shall be deemed to have resigned from all offices
and directorships then held with the Company or any affiliate, effective the
date of his termination.

     10.  Mitigation.  The Company and Executive agree that Executive shall
          ----------
have no duty of mitigation.  Accordingly, the parties agree that any
compensation earned by Executive after the date of his termination of employment
hereunder shall not be used to offset any severance or other benefits payable
pursuant to Section 9.

     11.  Confidential and Proprietary Information.
          ----------------------------------------

          Executive acknowledges that during the course of his employment
hereunder, he has been given and will have access to and be exposed to trade
secrets and confidential information in written, oral, electronic and other form
regarding the Company and its business, products and employees, including,
without limitation, leasing plans; development plans; acquisition strategies;
underwriting process; advertising and sales materials; research, and related
materials; vendor and industry information; practices, processes, techniques,
methods, and know-how; the identities of the Company's tenants, customers and
potential customers (hereinafter referred to collectively as "Customers"); and
the Company's business methods, practices, strategies, forecasts, pricing and
marketing techniques.  Executive expressly agrees to use such information only
for purposes of carrying out his duties for the Company and not for any other
purpose.  Except as required by law, Executive will not otherwise disclose such
information, directly or indirectly, to any third party or entity.

          All trade secrets, reports, manuals, and other ideas and materials
developed by Executive during the period of his employment, either solely or in
collaboration with others, which relate to the actual or anticipated business of
the Company, which result from or are suggested by any work Executive may do for
the Company, (collectively, the "Developments") shall be the sole and exclusive
property of the Company.  Executive agrees to assign to the Company his entire
right and interest in any such Development, and will execute any documents in
connection therewith that the Company may reasonably request.

          Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 11 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation.  Accordingly, Executive agrees
that if he violates the provisions of this Section 11, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.

     12.  Non-Solicitation. During the term of this Agreement, Executive shall
          ----------------
not divert or subvert any Company opportunity for continued existing business or
prospective business to his own benefit or for the benefit of any third parties,
nor shall Executive induce or attempt to induce any Customer to reduce its
business with the Company. Additionally, during the term of this Agreement and
for one (1) year after its termination, Executive shall not, directly or
indirectly, either of himself or for any other person, firm, company or
corporation, call upon, solicit, divert, take away or accept business from, or
attempt to solicit, divert, take away or accept business from any of the
Customers of the Company upon whom he called or whom he solicited or to whom he
catered or with whom he became acquainted after entering the employ of the
Company. Executive further acknowledges that, during the term of this Agreement
and for one (1) year after its termination, he shall not, directly or
indirectly, offer employment to, seek to hire, induce, solicit, encourage, or
attempt to induce any professional employee of the Company to seek or accept
employment with any other person or entity. Executive acknowledges that even an
unsuccessful solicitation of the Company's employees will negatively impact the
morale, commitment and performance of the employees in question, and that any
such solicitation may cause substantial financial loss to the Company.

          Executive acknowledges that the provisions of this Section 12 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 12 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation.  Accordingly, Executive agrees
that if he violates the provisions of this

                                       5
<PAGE>

Section 12, in addition to any other remedy which may be available at law or in
equity, the Company shall be entitled to specific performance and injunctive
relief, without posting bond or other security, and without the necessity of
proving actual damages.

     13.  Reserved

     14.  Disputes. Except as set forth in Sections 11 and 12 herein, any and
          --------
all disputes, grievances, demands, causes of action or controversies whatsoever
(including but not limited to tort and contract claims, and claims upon any law,
statute, order or regulation) (hereinafter "Claims"), arising under, out of, in
connection with or in relation to (i) Executive's employment with the Company;
(ii) questions of arbitrability under this Agreement; (iii) any relationship
between Executive and the Company before, at the time of entering, during the
term of, upon or after expiration or determination of this Agreement; or (iv)
the performance, interpretation and breach of this Agreement, shall, upon
written demand of either party to this Agreement, be finally determined and
settled by arbitration in Los Angeles, California, in accordance with the then
existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes, and judgment upon the award may be entered in any court having
jurisdiction thereof. The prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in the arbitration, in
addition to any other relief, including equitable and injunctive relief, that
may be granted. This dispute resolution process shall survive the termination of
Executive's employment.

     15.  Binding on Successors.  This Agreement shall be binding upon and
          ---------------------
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.

     16.  Governing Law.  This Agreement is being made and executed in and is
          -------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.

     17.  Validity.  The invalidity or unenforceability of any provision or
          --------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

     18.  Notices.  Any notice, request, claim, demand, document and other
          -------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:

          (a) If to the Company, addressed to its principal offices to the
attention of President, at 3500 Sepulveda Blvd., Manhattan Beach, California
90266;

          (b) If to the Executive, to him at the address set forth below under
this signature; or at any other address as any party shall have specified by
notice in writing to the other parties.

     19.  Entire Agreement.  As of the Effective Date, the terms of this
          ----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement, and
the previously existing employment agreement between the Executive and the
Company is hereby terminated and superseded by this Agreement as of the
Effective Date.  The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any proceeding to vary the terms of this
Agreement.

     20.  Amendments; Waivers. This Agreement may not be modified, amended, or
          -------------------
terminated except by an instrument in writing and signed by the Executive and
the Company.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                                 EXECUTIVE:

                                 ______________________________________
                                 WILLIAM HEWITT

                                       6
<PAGE>

                                 _______________________________________
                                 Street Address

                                 _______________________________________
                                 City      State         Zip


                                 COMPANY:

                                 CT OPERATING PARTNERSHIP, L.P.
                                 a California limited partnership

                                 By:       CENTER TRUST,
                                           INC., a Maryland corporation

                                           By:__________________________
                                           Its:_________________________

                                       7