With people queueing 100 metres down a Collingwood street on a Tuesday night, a passerby could mistake what was a rental inspection for a nightclub or a newly opened hip restaurant.

But the crowd of more than 300 tenants hoping to inspect the 26 apartments offered in Stanley Street last week was just another sign of Melbourne's tight rental market.

The proportion of vacant units across Melbourne fell to a four-year low of 1.7 per cent in February, Domain Group data shows. Melbourne's median weekly asking rent for units also hit $400 for the first time after climbing $20 over the year.

From the 160 applications received in less than an hour for the latest completed Gurner development, some tenants offered to pay between $20 and $50 a week more than the asking price.

The apartments, in the Foy and Gibson precinct, were listed between $450 and $600 a week for a one-bedroom and between $620 and $750 a week for a two-bedroom. Three-bedroom apartments received offers between $1400 and $1600 a week.

Developer Tim Gurner, who owns nine of the 26 apartments leased by agency PropertyX, said the rental bidding was mainly for two-bedroom apartments.

"A lot of the young couples have just decided they're price out of the market, so they're not worrying about trying to buy and purchase anymore," he said, adding that they instead looked for a rental they were happy to live in for a longer time.

"I think they're just willing to spend that extra $100 to $200 a week to make sure they get one they absolutely love and they can make it their own home.

"The market is starting to realise that not everybody will own their own home and that's probably OK."

Mr Gurner said only 30 or 40 per cent of the Stanley Street apartments were 12-month leases, with most rentals leasing for at least 18 months.

The tenant demographic ranged from doctors and nurses to university lecturers, with the strong interest for the Stanley Street development attributed its quality, location and apartment size.

The minimum size for a one-bedroom apartment is 60 square metres, including the balcony. Two-bedroom apartments ranged from 71 to 85 square metres.

Exposed brick detailing and feature concrete ceilings are also points of difference.

"We had two people on every floor and we still couldn't actually keep up with the number of people [at the inspection]," Mr Gurner said.

"So we had to stop it at an hour because we well and truly got enough [interest] by that time."

The $30 million project first launched to market in June 2015 with 52 apartments, which were consolidated to 40 because of demand from owner-occupiers for three-bedroom homes.

Ikebana, another Gurner project at 130 Dudley Street, West Melbourne, also had strong demand for luxury apartments.

Just before Christmas, 150 Japanese-inspired apartments attracted more than 1500 inquiries and 200 applications in 10 days.