Jim Lytle gunned his silver BMW past the boarded-up model homes and the faded red flags of an abandoned sales office, then steered into a grid of empty streets and yellowed grass.
Millions of dollars were spent to turn farmland into housing tracts. Lots were graded, roads were paved, sewers installed. The houses? They will come, Lytle promises, right here on these acres and acres of weed-strewn fields.
"This is a broken subdivision, which is obvious by looking at the ground," said Lytle, whose real estate investment firm has been snapping up land in Winchester and throughout Riverside County. "But I still believe the American dream is alive and well in homeownership."
Few places have been as devastated by the Great Recession as the Inland Empire, a region of 4 million people encompassing Riverside and San Bernardino counties. Unemployment has tripled since 2006. Home values have plunged 56% in Riverside County and 60% in San Bernardino County. Nearly 12,500 foreclosure notices were filed in the three months that ended Sept. 30.
Yet amid the stillborn subdivisions, abandoned storefronts and crowded unemployment offices, there are early stirrings of recovery.
Foreign companies are setting up manufacturing centers, attracted by cheap land and a weak dollar. Shoppers are trickling back to malls, with the latest figures from the state showing both San Bernardino and Riverside counties outpacing Los Angeles County in growth of taxable sales.
The region's unemployment rate fell to 13.4% in September, down from 14.1% in August, the state reported Friday. The Inland Empire added a net 4,700 jobs in a month when the state overall gained 11,800 positions.
Lytle's company, Rancon Group, has bought 3,000 residential lots in Riverside County over the last three years. The plan is to sell them off to home builders as the housing market recovers, which Lytle predicts will happen by 2013.
"We really believe we're at the bottom," he said. "We're already seeing pockets of strength in some of these locations."
Those signs of recovery, while spotty, are tied to the same factor that powered the Inland Empire's rapid growth: location.
From 2000 to 2010, the region's population increased three times as fast as California overall, much of that driven by home buyers priced out of neighboring Los Angeles, Orange and San Diego counties.
Location has also made the Inland Empire a hub for manufacturers, warehouse operations and cargo companies. The region boasts two major interstates, commercial airports including Ontario International, and a major rail line with access to the ports of Los Angeles and Long Beach.
"We have a great transportation system, our freeways are not all plugged up, everything is a little bit less expensive as compared to San Diego or Orange County," said Roy Paulson, whose Temecula company, Paulson Manufacturing Corp., makes protective eyewear. "We just need to get more businesses here to round it out."
New businesses, some from Asia, are coming into the Inland Empire, albeit slowly.
In January, Wakunaga of America, a Japanese-owned company that makes garlic tablets and other health supplements, opened a 53,000-square-foot factory in the busy industrial area of Mira Loma.
Tisha Kholoud, who was out of work for more than a year after losing her job at a Borders warehouse, was one of 40 people the company has hired.
In a pristine factory room, Kholoud, wearing a face mask and hairnet, checked boxes for expiration dates as a machine methodically dropped pills into glass bottles and sealed them.
"I was very worried, knowing what the unemployment rate was," said the 43-year old Riverside resident. "I'm very glad to be here."
Attracting foreign investment is becoming a key part of the Inland Empire's strategy to create jobs. Riverside County created an Office of Foreign Trade in 2009 to boost exports and recruit businesses from overseas.
The Office of Foreign Trade has also created 40 loan centers under the federal government's EB-5 immigrant visa program, in which foreign investors can qualify for a U.S. visa by making investments that create jobs. The office has also helped expand four federally approved foreign trade zones, which waive import duties on certain products used in manufacturing.
Tom Freeman, the county's foreign trade commissioner, has signed bilateral trade deals between Riverside County and both Croatia and Japan, aiming to strengthen business ties between the regions.
Colorful flags of foreign nations surround his desk in Riverside. Gifts from visiting trade emissaries are showcased in the lobby: a mother-of-pearl comb from China, a fan from Japan, a book about Chopin from Poland.
No opportunity is too small; he's currently trying to get Riverside workers jobs designing golf courses in Croatia.
"If we don't have foreign direct investment, whether it comes from Israel, Japan or South Korea, our unemployment picture is significantly higher," Freeman said.
