(FORTUNE Magazine) – After years of giving U.S. companies the cold shoulder, and despite the on- off-on nature of recent trade talks, Canadians seem friendlier to Yankee developers than at any time since the 1950s. The Seltzer Organization, a Philadelphia developer, says it got a warm welcome recently when it arrived in Toronto to begin work on a suburban office complex. The reception was surprising. Even though Canadian developers, such as Toronto's giant Olympia & York, have built huge operations in the U.S., American firms, like Seltzer, had been almost frozen out of the Canadian market. Donald Baxter of metropolitan Toronto's development office says that the Mulroney government takes a more relaxed attitude toward foreign investment than previous administrations. Referring to the $2 billion that Chicago's JMB Realty will pay in October to acquire Canadian real estate giant Cadillac Fairview, he says: ''U.S. developers are coming in the back door as well as the front.'' What's attracting U.S. firms to Toronto are office vacancy rates of under 4%, vs. a 19% average in the U.S. The influx of developers is partly a response to Canada's deregulation of financial markets in June -- the so-called Little Bang (as opposed to London's Big Bang) that brought investment companies from all over the world to Toronto. Baxter thinks many U.S. banks have arrived to get a foretaste of life after Glass-Steagall. ''They've come because they can do things here that they can't yet do at home, like trade securities and sell insurance,'' he says. ''They've come up here to cut their teeth.''