<PAGE>
 
                                                                   EXHIBIT 10.16
                                                                                
                            JDN REALTY CORPORATION



                             EMPLOYMENT AGREEMENT



          THIS AGREEMENT, dated as of May 1, 1997 (the "Effective Date"), is by
and between JOHN D. HARRIS, JR. (the "Employee") and JDN REALTY CORPORATION, a
Maryland corporation (the "Company").


                                 WITNESSETH:


          WHEREAS, the Employee desires to be employed by the Company, and the
Company desires to employ the Employee, on the terms, covenants and conditions
hereinafter set forth in this Agreement.

          NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements herein set forth, the Company and the
Employee agree as follows:

          1.  EMPLOYMENT.
              ---------- 

          Subject to the terms and conditions set forth in this Agreement, on
and as of the Effective Date the Company hereby employs and engages the Employee
to hold the titles of Controller and Assistant Secretary of the Company and
perform the duties of such positions as set forth in the Company's Bylaws and as
designated by the board of directors of the Company (the "Board of Directors").
In such capacities, and subject to review by the Board of Directors, the
Employee shall also perform such duties and responsibilities as may be assigned
to him from time to time by the Board of Directors.  The duties the Employee is
to perform hereunder shall be conducted from the Atlanta, Georgia metropolitan
area, where the principal offices of the Company are located.  The Employee may
be required from time to time to perform his duties hereunder on an occasional
basis at such other places as the Board of Directors shall reasonably designate
or as the interests or business opportunities of the Company may reasonably
require; provided, however, that without the Employee's consent, the Employee
shall not be required to relocate from the Atlanta, Georgia metropolitan area.
The Employee hereby accepts such employment and agrees to serve the Company as
an officer for the term of this Agreement.

          2.  TERM OF EMPLOYMENT.
              ------------------ 

          Except as otherwise provided herein, the term of this Agreement shall
be for one (1) year commencing on the Effective Date and ending on the first
anniversary of the Effective Date (the "Employment Term").  While the Employee
is employed hereunder, the Employment Term shall automatically be extended for
one (1) year upon the occurrence of an anniversary of the Effective Date, unless
either party has given notice of intention to terminate ninety (90) days prior
to such anniversary of the Effective Date, or unless the Employee's employment
has otherwise terminated as hereinafter provided.

          3.  DEVOTION TO DUTIES.
              ------------------ 

          The Employee agrees that during the period that he is employed
hereunder, he shall devote substantially all his business time and attention to
the business and affairs of the Company, shall use his best efforts to promote
the interests of the Company and shall not enter 
<PAGE>
 
into any other business affiliations or arrangements without the prior written
consent of the Company. Nothing in this Section 3, however, is intended to
prevent the Employee from engaging in additional activities in connection with
personal investments and community or professional affairs that are not
inconsistent with the Employee's duties and obligations under this Agreement,
including without limitation Section 10 hereof.


          4.  COMPENSATION OF EMPLOYEE.
              ------------------------ 


          4.1.  BASE SALARY.  During the term of this Agreement, the Company
                -----------                                                 
shall pay to the Employee as compensation for the services to be performed by
the Employee a base salary of Ninety Thousand Dollars ($90,000) per year (the
"Base Salary").  The Base Salary shall be payable in installments in accordance
with the Company's normal payroll practice.  Commencing on January 1, 1997 and
on January 1 of each year thereafter, or as soon as practicable thereafter, the
Compensation Committee of the Board of Directors (the "Compensation Committee"),
or the Board of Directors if the Compensation Committee is not then in
existence, shall review the Base Salary, and shall authorize, in its discretion,
an appropriate increase in the Base Salary.

 
          4.2.  BONUS.  In addition to the compensation set forth elsewhere in
                -----                                                         
this section 4, for each year or portion thereof during the term of this
Agreement and any extensions thereof, the Employee shall be entitled to receive
a bonus in an amount to be determined by the Compensation Committee, or the
Board of Directors if the Compensation Committee is not then in existence, in
its discretion, based upon its evaluation of the Employee's performance during
such year or portion thereof.

          4.3.  BENEFITS.  The Employee shall be entitled to participate, during
                --------                                                        
the period of actual employment, in all regular employee benefit and deferred
compensation plans established by the Company, including, without limitation,
any savings and profit sharing plan, dental and medical plans, life insurance,
and personal catastrophe and disability insurance, such participation to be as
provided in said employee benefit plans.  The Employee shall also be entitled
during the period of actual employment to such paid vacation as is provided in
the policy adopted by the Board of Directors.  For purposes of this Agreement,
the term "period of actual employment" means the portion of the Employment Term
during which the Employee is employed, but not the portion following the
Employee's termination of employment.

          4.4.  OFFICE AND SECRETARY.  The Employee shall be provided office
                --------------------                                        
space, secretarial assistance and such other facilities and services as are
suitable to his position and appropriate for the performance of his duties.

          4.5.  REIMBURSEMENT OF EXPENSES.  The Company shall provide for the
                -------------------------                                    
payment or reimbursement of all reasonable and necessary expenses incurred by
the Employee in connection with the performance of his duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.

                                       2
<PAGE>
 
          5.  TERMINATION OF EMPLOYMENT.
              ------------------------- 


          5.1.  TERMINATION FOR CAUSE.  "Termination For Cause", as hereinafter
                ---------------------                                          
defined, may be effected by the Company at any time during the term of this
Agreement by written notification to the Employee.  Upon Termination For Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Termination For Cause" shall mean termination by the Company of the Employee's
employment by the Company by reason of the Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
by reason of the Employee's willful material breach of this Agreement which has
resulted in material injury to the Company.


          5.2.  TERMINATION OTHER THAN FOR CAUSE.  Notwithstanding any other
                --------------------------------                            
provisions of this Agreement, the Company may effect a "Termination Other Than
For Cause", as hereinafter defined, at any time upon giving written notice to
the Employee of such termination.  Upon any Termination Other Than for Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in subsection 6.2.
"Termination Other Than for Cause" shall mean termination by the Company of the
Employee's employment by the Company other than a termination pursuant to
subsection 5.1, 5.3, 5.4, 5.5 or 5.6, and shall include constructive termination
of the Employee's employment by reason of material breach of this Agreement by
the Company, such constructive termination to be effective upon notice from the
Employee to the Company of such constructive termination.

          5.3.  TERMINATION BY REASON OF DISABILITY.  If, during the term of
                -----------------------------------                         
this Agreement, the Employee, in the reasonable judgment of the Board of
Directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the Company
shall have the right to terminate the Employee's employment hereunder by written
notification to the Employee and payment to the Employee of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plans), any benefits under any plans of the
Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, with the exception of medical and
dental benefits which shall continue through the expiration of this Agreement,
but the Employee shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.

                                       3
<PAGE>
 
          5.4.  DEATH.  In the event of the Employee's death during the term of
                -----                                                          
this Agreement, the Employee's employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the Company shall
pay to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company in which the Employee is a participant to the full
extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.

          5.5.  VOLUNTARY TERMINATION.  In the event of a "Voluntary
                ---------------------                               
Termination,"  as hereinafter defined, the Company shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plans), any benefits under any plans
of the Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Voluntary Termination" shall mean termination by the Employee of Employee's
employment other than (i) constructive termination as described in subsection
5.2, (ii) termination by reason of the Employee's disability as described in
subsection 5.3, (iii) termination by reason of the Employee's death as described
in subsection 5.4, and (iv) Termination Upon a Change in Control as described in
subsection 5.6.

          5.6.  TERMINATION UPON A CHANGE IN CONTROL.  In the event of a
                ------------------------------------                    
"Termination Upon a Change in Control," as hereinafter defined, the Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plans), any
benefits under any plans of the Company in which Employee is a participant to
the full extent of the Employee's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, and all severance
compensation provided in subsection 6.1.  "Termination Upon a Change in Control"
shall mean a termination by the Employee of the Employee's employment with the
Company following a "Change in Control," as hereinafter defined.  "Change in
Control" shall mean (i) the date on which the Company first determines that any
person and all other persons which constitute a group, within the meaning of
Section 13(d)(3) of the Exchange Act, have acquired direct or indirect
beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act,
of twenty percent (20%) or more of the Company's outstanding securities, unless
a majority of the "Continuing Directors", as hereinafter defined, approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Board of Directors are not Continuing Directors.  "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors who
(i) was a member of the Board of Directors on December 31, 1993, (ii) has been a
member of the Board of Directors for the two years immediately preceding such
date of determination, or (iii) was nominated for election or elected to the
Board of Directors with the affirmative vote of the greater of (A) a majority of
the Continuing Directors who were members of the Board of Directors at the time
of such nomination or election or (B) at least four Continuing Directors.

                                       4
<PAGE>
 
          5.7.  NOTICE OF TERMINATION.  The Company or the Employee may effect a
                ---------------------                                           
termination of the Employee's employment by the Company pursuant to the
provisions of this section 5 upon giving thirty (30) days' written notice to the
other party of such termination.

          6.  SEVERANCE COMPENSATION
              ----------------------

          6.1.  TERMINATION UPON CHANGE IN CONTROL.  In the event the Employee's
                ----------------------------------                              
employment is terminated in a Termination Upon a Change in Control, the Employee
shall be paid the following as severance compensation:


              (a) For one (1) year following such termination of employment, an
          amount (payable on the dates specified in subsection 4.1 except as
          otherwise provided herein) equal to the sum of (i) the Base Salary at
          the rate payable at the time of such termination and (ii) the average
          of the annual bonus earned by the Employee in the two (2) years
          immediately preceding the date of termination.  If, however, the
          Employee obtains other employment during such period, the amount
          payable under this paragraph (a) shall be reduced by the amount of
          compensation that the Employee is receiving from such other
          employment; provided, however, the Employee is under no obligation to
          mitigate the amount due to the Employee pursuant to this paragraph (a)
          by seeking other employment or otherwise.  Notwithstanding any
          provision in this paragraph (a) to the contrary, the Employee may, in
          the Employee's sole discretion, by delivery of a notice to the Company
          within thirty (30) days following a Termination Upon a Change in
          Control, elect to receive from the Company a lump sum severance
          payment by bank cashier's check equal to the present value of the flow
          of cash payments that would otherwise be paid to the Employee pursuant
          to this paragraph (a).  Such present value shall be determined as of
          the date of delivery of the notice of election by the Employee and
          shall be based on a discount rate equal to the interest rate on 90-day
          United States Treasury bills, as reported in the Wall Street Journal,
          or similar publication, on the date of delivery of the election
          notice.  If the Employee elects to receive a lump sum severance
          payment, the Company shall make such payment to the Employee within
          ten (10) days following the date on which the Employee notifies the
          Company of the Employee's election.



              (b) In the event that the Employee is not otherwise entitled to
          fully exercise all awards granted to him under the Company's Incentive
          Stock Plan, and the Incentive Stock Plan does not otherwise provide
          for acceleration of exerciseability upon the occurrence of the Change
          in Control described herein, such awards shall become immediately
          exercisable upon a Change in Control.



              (c) The Employee shall continue to accrue retirement benefits and
          shall continue to enjoy any benefits under any plans of the Company in
          which the Employee is a participant to the full extent of the
          Employee's rights under such plans, including any perquisites provided
          under this Agreement, through the remainder of the Employment Term;
          provided, however, that the benefits under any such plans of the
          Company in which the Employee is a participant, including any such
          perquisites, shall cease upon the Employee's obtaining other
          employment.  If necessary to provide such benefits to the Employee,
          the Company shall, at its election, either: (i) amend its employee
          benefit plans to provide the 

                                       5
<PAGE>
 
          benefits described in this paragraph (c), to the extent that such is
          permissible under the nondiscrimination requirements and other
          provisions of the Internal Revenue Code of 1986 (the "Code") and the
          provisions of the Employee Retirement Income Security Act of 1974, or
          (ii) provide separate benefit arrangements or cash payments so that
          the Employee receives amounts equivalent thereto, net of tax
          consequences.


          6.2.  TERMINATION OTHER THAN FOR CAUSE.  In the event the Employee's
                --------------------------------                              
employment is terminated in a Termination Other Than for Cause, the Employee
shall be paid as severance compensation his Base Salary, at the rate payable at
the time of such termination, through the remainder of the Employment Term, on
the dates specified in subsection 4.1; provided, however, that if the Employee
obtains other employment during such period, the severance compensation payable
to the Employee during such period will be reduced by the amount of compensation
that the Employee is receiving from such other employment.  Notwithstanding any
provision in this subsection 6.2 to the contrary, the Employee may, in the
Employee's sole discretion, by delivery of a notice to the Company within thirty
(30) days following a Termination Other Than for Cause, elect to receive from
the Company a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to the
Employee pursuant to this subsection 6.2.  Such present value shall be
determined as of the date of delivery of the notice of election by the Employee
and shall be based on a discount rate equal to the interest rate on 90-day
United States Treasury bills, as reported in the Wall Street Journal, or similar
publication, on the date of delivery of the election notice.  If the Employee
elects to receive a lump sum severance payment, the Company shall make such
payment to the Employee within ten (10) days following the date on which the
Employee notifies the Company of the Employee's election.  In the event that the
Employee is not otherwise entitled to fully exercise all awards granted to him
under the Company's Incentive Stock Plan, and the Incentive Stock Plan does not
otherwise provide for acceleration of exerciseability upon the occurrence of a
Termination Other Than for Cause described herein, such awards shall become
immediately exercisable upon a Termination Other Than for Cause.

          6.3.  TERMINATION UPON ANY OTHER EVENT.  In the event of a Voluntary
                --------------------------------                              
Termination, Termination For Cause, termination by reason of the Employee's
disability pursuant to subsection 5.5 or termination by reason of the Employee's
death pursuant to subsection 5.6, the Employee or his estate shall not be paid
any severance compensation.

          6.4.      PARACHUTE PAYMENT REDUCTION.  Notwithstanding any other
                    ---------------------------                            
provisions of this Agreement, any amounts payable under this Agreement
(including but not limited to severance payments) shall be limited to the
maximum amount that may be paid so that no such payment will, when combined with
all other amounts to be received by the Employee upon a change in control
(described in Section 280G(b)(2)(A) of the Code), constitute a "parachute
payment" (defined in Section 280G(b)(2) of the Code) and so that no "excess
parachute payments" (defined in Section 280G(b)(1) of the Code) made to the
Employee are taxable to the Employee pursuant to Section 4999 of the Code.  The
parties intend that the Employee shall receive the maximum payments permissible
that are not subject to the taxes described in Sections 280G and 4999 of the
Code and shall interpret this provision in accordance with such intention.  In
further accord with such intention, nothing herein shall be construed to limit
the Employee's right to receive payments that do not exceed reasonable
compensation for services or to receive payments that are otherwise not taken
into account in calculating "parachute payments" under Section 280G of the Code.

                                       6
<PAGE>
 
          7.  OBLIGATIONS CONTINGENT ON PERFORMANCE.
              ------------------------------------- 

          The obligations of the Company under this Agreement, including its
obligation to pay the compensation provided for herein, shall be contingent upon
the Employee's performance of his obligations under this Agreement.



          8.  CONFIDENTIALITY.
              --------------- 


          The Employee agrees to hold in strict confidence all information
concerning any matters affecting or relating to the business of the Company,
including without limiting the generality of the foregoing its manner of
operation, plans, protocols, processes, computer programs, tenant lists, client
lists, marketing information and analyses, or other data, without regard to
whether all of the foregoing matters will be deemed confidential or material.
The Employee agrees that he will not, directly or indirectly, use any such
information for the benefit of others than the Company or disclose or
communicate any of such information in any manner whatsoever other than to the
directors, officers, employees, agents and representatives of the Company who
need to know such information, who shall be informed by the Employee of the
confidential nature of such information and directed by the Employee to treat
such information confidentially.  Upon the Company's request, the Employee shall
return all information furnished to him related to the business of the Company.
The above limitations on use and disclosure shall not apply to information which
the Employee can demonstrate:  (a) was known to the Employee before receipt
thereof from the Company; (b) is learned by the Employee from a third party
entitled to disclose it; or (c) becomes known publicly other than through the
Employee.  The parties hereto stipulate that all such information is material
and confidential and gravely affects the effective and successful conduct of the
business of the Company and the Company's goodwill, and that any breach of the
terms of this section 8 shall be a material breach of this Agreement.  The terms
of this section 8 shall remain in effect following the termination of this
Agreement.


          9.  USE OF PROPRIETARY INFORMATION.
              ------------------------------ 

          The Employee recognizes that the Company possesses a proprietary
interest in all of the information described in section 8 and has the exclusive
right and privilege to use, protect by copyright, patent or trademark,
manufacture or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing.  The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee, his
agents or affiliates, during the term of this Agreement, based on or arising out
of the information described in section 8 shall be the property of and inure to
the exclusive benefit of the Company.  The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the Company's time,
materials or other resources, shall be promptly disclosed to the Company and
shall become the exclusive property of the Company.

          10.  NON-COMPETITION AGREEMENT.
               ------------------------- 

          10.1.  NON-COMPETITION.  The Employee agrees that, during the period
                 ---------------                                              
of actual employment, the Employee shall not, without the prior written consent
of the Company, directly 

                                       7
<PAGE>
 
or indirectly, own, manage, operate, control, be connected with as an officer,
employee, partner, consultant or otherwise, or otherwise engage or participate
in, except as an employee of the Company, or any corporation directly or
indirectly controlled by it, any corporation or other business entity engaged in
any activity competitive with the Company, including the business of owning,
developing, leasing or managing shopping center properties. Notwithstanding the
foregoing, the ownership by the Employee of less than 2% of any class of the
outstanding capital stock of any corporation conducting such a competitive
business which is regularly traded on a national securities exchange or in the
over-the-counter market shall not be a violation of the foregoing covenant.

          10.2.  NON-SOLICITATION.  During the period of actual employment, the
                 ----------------                                              
Employee shall not, except on behalf of or with the prior written consent of the
Company, (a) contact or solicit, directly or indirectly, any customer, client,
tenant or account whose identity the Employee obtained through association with
the Company, regardless of the geographical location of such customer, client,
tenant or account, or (b) directly or indirectly, entice or induce, or attempt
to entice or induce, any employee of the Company to leave such employ, or employ
any such person in any business similar to or in competition with that of the
Company.  The Employee hereby acknowledges and agrees that the provisions set
forth in this subsection 10.2 constitute a reasonable restriction on his ability
to compete with the Company.

          10.3. SAVING PROVISION.  The parties hereto agree that, in the event a
                ----------------                                                
court of competent jurisdiction shall determine that the geographical or
durational elements of this covenant are unenforceable, such determination shall
not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the
remaining aspects shall not be affected thereby.

          10.4.  EQUITABLE RELIEF.  The Employee acknowledges that the extent of
                 ----------------                                               
damages to the Company from a breach of sections 8, 9 and 10 of this Agreement
would not be readily quantifiable or ascertainable, that monetary damages would
be inadequate to make the Company whole in case of such a breach, and that there
is not and would not be an adequate remedy at law for such a breach.  Therefore,
the Employee specifically agrees that the Company is entitled to injunctive or
other equitable relief from a breach of sections 8, 9 and 10 of this Agreement,
and hereby waives and covenants not to assert against a prayer for such relief
that there exists an adequate remedy at law, in monetary damages or otherwise.

          11.  INDEMNIFICATION.
               --------------- 

          11.1.  RIGHT TO INDEMNIFICATION.  The Company shall indemnify, and on
                 ------------------------                                      
request shall advance funds to, the Employee for expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement if the
Employee becomes a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
the Employee (a) is or was an employee of the Company, or (b) is or was serving
at the request of the Company as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in the manner and to the fullest extent
permitted by applicable law; provided, however, that the Company shall not
indemnify the Employee (a) in any proceeding by or in the right of the Company
against such Employee wherein the Employee shall have been adjudged to be liable
to the Company; (b) in any proceeding charging improper personal benefit to the
Employee, whether or not involving action in the Employee's official capacity,
in which the Employee was 

                                       8
<PAGE>
 
adjudged to be liable on the basis that personal benefit was improperly
received; or (c) it is established that (i) the act or omission of the Employee
was material to the matter giving rise to the proceeding and the act or omission
was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the indemnitee actually received an improper personal benefit
in money, property or services, or (iii) in the case of any criminal proceeding,
the Employee had reasonable cause to believe the act or omission was unlawful.
If applicable law is hereafter amended, any such amendment shall apply to this
Agreement only to the extent mandated by law and only as to the activities of
the Employee subject to indemnification pursuant to this subsection 11.1 which
occur subsequent to the effective date of such amendment.

          11.2.  RIGHT OF CLAIMANT TO ENFORCE RIGHTS.  Any indemnification or
                 -----------------------------------                         
advancement of funds required under this section 11 shall be made promptly, and
in any event within thirty (30) days of the written request of the Employee.  If
a determination by the Company that the Employee is entitled to indemnification
pursuant to this section 11 is required, and the Company fails to respond within
thirty (30) days to a written request for indemnity, the Company shall be deemed
to have approved such request. If the Company denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in full
pursuant to such request is not made within thirty (30) days, the right to
indemnification and advancement of expenses as granted by this section 11 shall
be enforceable by the Employee in any court of competent jurisdiction.  The
Employee's costs and expenses incurred in connection with successfully
establishing the Employee's right to indemnification, in whole or in part, in
any such action or proceeding shall also be indemnified by the Company.  Neither
the failure of the Company (including the Board of Directors, independent legal
counsel or the stockholders of the Company) to have made a determination prior
to the commencement of such action that indemnification of the Employee is
proper in the circumstances because the Employee has met the applicable standard
of conduct set forth in the General Corporation Law of the State of Maryland,
nor the fact that there has been an actual determination by the Company
(including the Board of Directors, independent legal counsel or the shareholders
of the Company) that the Employee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Employee has not met the applicable standard of conduct.

          11.3.  NON-EXCLUSIVITY OF RIGHTS.  The indemnification and advancement
                 -------------------------                                      
of expenses provided by, or granted pursuant to, this section 11 shall not be
deemed exclusive of any other rights to which the Employee may be entitled by
law, the Company's Articles of Incorporation or Bylaws, an agreement with the
Company, or a resolution of the Board of Directors or of the Company's
shareholders.  Any repeal or modification of the provisions of this section 11
shall be prospective only and shall not adversely affect any right or protection
set forth herein in favor of the Employee at the time of such repeal or
modification.

          11.4.  INSURANCE.  The Company may, to the fullest extent permitted by
                 ---------                                                      
law, purchase and maintain insurance, at its expense, to protect itself and the
Employee against any liability asserted against the Employee and incurred by the
Employee in any such capacity, or arising out of the Employee's duties
hereunder, whether or not the Company would have the power to indemnify the
Employee against such liability under the provisions of this section 11, the
General Corporation Law of the State of Maryland or otherwise.

          11.5.  SAVING PROVISION.  If this section 11 or any portion thereof
                 ----------------                                            
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify the Employee as to expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
with respect to any actual or threatened action, suit or 

                                       9
<PAGE>
 
proceeding, whether civil, criminal, administrative, investigative or otherwise,
to the fullest extent permitted by any applicable portion of this section 11
which shall not have been invalidated, by the General Corporation Law of the
State of Maryland or by any other applicable law.


          12.  ENTIRE AGREEMENT.
               ---------------- 

          This Agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the Effective Date,
supersede all other agreements or arrangements between the parties with regard
to the subject matter hereof.



          13.  BINDING AGREEMENT.
               ----------------- 


          This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns.  The obligations of the Company under this Agreement shall not be
terminated by reason of any liquidation, dissolution, bankruptcy, cessation of
business or similar event relating to the Company.  This Agreement shall not be
terminated by reason of any merger, consolidation or reorganization of the
Company, but shall be binding upon and inure to the benefit of the surviving or
resulting entity.


          14.  MODIFICATION.
               ------------ 

          No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith and no evidence of any waiver
or modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
thereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.

          15.  SEVERABILITY.
               ------------ 

          All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid or unenforceable by any court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.

          16.  MANNER OF GIVING NOTICE.
               ----------------------- 

          All notices, requests and demands to or upon the respective parties
hereto shall be sent by hand, certified mail, overnight air courier service, or
telecopier (if within a reasonable time a permanent copy is given by any of the
other methods described above), in each case with all applicable charges paid or
otherwise provided for, addressed as follows, or to such other address as may
hereafter be designated in writing by the respective parties hereto:

                                       10
<PAGE>
 
          To Company:
          ---------- 

                 JDN Realty Corporation
                 3340 Peachtree Road NE
                 Suite 1530
                 Atlanta, Georgia  30326
                 Telephone:  (404) 262-3252
                 Facsimile:  (404) 364-6446



          To Employee:
          ----------- 

                 John D. Harris, Jr.       
                 3340 Peachtree Road NE    
                 Suite 1530                
                 Atlanta, Georgia 30326    
                 Telephone:  (404) 262-3252
                 Facsimile:  (404) 364-6446 


Such notices, requests and demands shall be deemed to have been given or made on
the date of delivery if delivered by hand or by telecopy and on the next
following date if sent by mail or by air courier service.

          17.  REMEDIES.
               -------- 

          In the event of a breach of this Agreement, the non-breaching party
shall be entitled to such legal and equitable relief as may be provided by law,
and shall further be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing the non-breaching party's
rights hereunder.



          18.  HEADINGS.
               -------- 

          The headings have been inserted for convenience only and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.


          19.  CHOICE OF LAW.
               ------------- 

          It is the intention of the parties hereto that this Agreement and the
performance hereunder be construed in accordance with, under and pursuant to the
laws of the State of Maryland without regard to the jurisdiction in which any
action or special proceeding may be instituted.

                                       11
<PAGE>
 
          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first stated above.



                              JDN REALTY CORPORATION



                              By:   /s/ J. Donald Nichols
                                    ---------------------
                                    J. Donald Nichols
                                    Chief Executive Officer



                                    /s/ John D. Harris, Jr.
                                    -----------------------
                                    JOHN D. HARRIS, JR.

                                       12