<PAGE>

                                                             EXHIBIT 10.49

                       CATELLUS DEVELOPMENT CORPORATION



                                                          November 16, 1996


Mr. Stephen P. Wallace
Chief Financial Officer
Catellus Development Corporation
201 Mission Street
San Francisco, CA 94105

Dear Steve:

                  The purpose of this letter is to amend that certain Employment
Agreement dated as of July 24, 1995 (the "Employment Agreement") between
Catellus Development Corporation (the "Company") and you as follows:

     1.  TERM OF  AGREEMENT.  The  term of the  Employment  Agreement  shall  be
extended from June 30, 1998 to December 31, 2000.

     2. BONUS. Section 1.4 of the Employment Agreement is hereby amended to read
in its entirety as follows:

         "1.4     Bonuses.

                           (a) Executive shall be eligible to receive an annual
         bonus (the "Base Bonus") equal to up to 100% of Base Salary commencing
         with the year beginning January 1, 1996. The maximum Base Bonus shall
         consist of two elements: (i) Subjective Goals -- 50% of the Base Bonus
         shall be payable based upon the successful completion of goals which
         require the subjective evaluation of the Chief Executive Officer of the
         Company; and (ii) Objective Goals -- 50% of the Base Bonus shall be
         payable based upon the successful completion of goals based upon
         totally objective standards. The Base Bonus shall be payable each year
         no later than March 31.

                           (b) Executive shall be eligible to receive an
         additional bonus (the "Additional Bonus"). The maximum Additional Bonus
         potential is 100% of base salary, but no greater than the amount of
         Base Bonus awarded. The criteria for Additional Bonus awards shall be
         objective goals, the accomplishment of which shall lead to results far
         in excess of expected performance and add tangible value

                                       1
<PAGE>

         to the Company beyond that anticipated in the Company's Business Plan.
         The Additional Bonus shall be payable each year no later than March 31.


                           (c) There may be numerous goals within each bonus
         category. Achieving all the goals will lead to a 100% bonus award. It
         will be possible to earn 100% of the bonus amount with the
         accomplishment of a significant percentage of, but less than 100% of,
         performance goals or with the accomplishment of the more difficult
         goals and/or certain of the goals with far reaching consequences. The
         determination of the achievement of goals will be made by the Chief
         Executive Officer of the Company.

                         (d) All bonus payments shall be subject to appropriate
          withholding paymentsdeducted therefrom."

               3.  TERMINATION  PAYMENTS.  The first paragraph of Section 1.8
          of the Agreement is hereby amended to read as follows:

         "1.8     Benefits Upon Termination.
                  --------------------------

                           (a) If, at any time during the term of this
         Agreement, (i) Executive involuntarily ceases to be an employee of the
         Company for any reason other than (A) Termination for Cause, (B)
         disability at a time when Executive is receiving disability benefits
         under a long-term disability plan or disability insurance provided by
         the Company, (C) death, or (D) normal retirement under the Company's
         pension plan or a qualified retirement plan of the Company or (ii)
         Executive terminates employment with the Company for Good Reason (as
         defined below), then the amount of benefits payable on account of such
         termination shall be equal to the sum of (1) unpaid accrued salary as
         of the Date of Termination, (2) unpaid salary with respect to any
         vacation days accrued but not taken as of the Date of Termination, (3)
         the number of full months remaining in this Agreement, but not to
         exceed 24, multiplied by the average monthly Base Salary (determined
         without regard to amounts payable under any bonus program, or other
         forms of extraordinary compensation) for the immediately preceding 2-
         year period or, if Executive has not served the Company for 24 months,
         then the average monthly Base Salary (determined without regard to
         amounts payable under any bonus program, or other forms of
         extraordinary compensation) for such shorter period; and (4) the number
         of full or partial months remaining in the period commencing on the
         first day following the most recent period in respect of which the Base
         Bonus has been paid and ending on December 31, 2000, but not to exceed
         24, multiplied by the average monthly Base Bonus and Additional Bonus
         for the immediately preceding 2-year period or, if Executive has not
         served the Company for 24 months, then the average monthly Base Bonus
         and Additional Bonus for such shorter period, provided, however,
                                                       --------- -------- that
         the amount of such benefits shall be reduced by any other benefits
         provided upon termination of

                                       2
<PAGE>

         employment to which Executive may be entitled under any severance
         agreement with the Company.

                  Except as expressly set forth herein, all other terms and
provisions of the Employment Agreement shall remain in full force and effect and
in all other respects are hereby ratified and confirmed.

                  If you are in agreement with the foregoing, please sign and
return an enclosed counterpart of this letter.

                                                     Very truly yours,

                                                     CATELLUS DEVELOPMENT
                                                              CORPORATION


                                                     By:______________________
                                                     Title:  President and Chief
                                                             Executive Officer



AGREED this _____ day of November, 1996:

/s/ Stephen P. Wallace
----------------------------
Stephen P. Wallace

                                       3