1. Worldwide loss of biodiversity necessitates a clear understanding of the factors driving population declines as well as informed predictions about which species and populations are at greatest risk. The biggest threat to the long-term persistence of populations is the reduction and changes in configuration of their natural habitat. 2. Inconsistencies have been noted in the responses of populations to the combined effects of habitat loss and fragmentation. These have been widely attributed to the effects of the matrix habitats in which remnant focal habitats are typically embedded. 3. We quantified the potential effects of the inter-patch matrix by estimating occupancy and colonization of forest and surrounding non-forest matrix (NF). We estimated species-specific parameters using a dynamic, multi-species hierarchical model on a bird community in southwestern Costa Rica. 4. Overall, we found higher probabilities of occupancy and colonization of forest relative to the NF across bird species, including those previously categorized as open habitat generalists not needing forest to persist. Forest dependency was a poor predictor of occupancy dynamics in our study region, largely predicting occupancy and colonization of only non-forest habitats. 5. Our results indicate that the protection of remnant forest habitats is key for the long-term persistence of all members of the bird community in this fragmented landscape, including species typically associated with open, non-forest habitats. 6.Synthesis and applications. We identified 39 bird species of conservation concern defined by having high estimates of forest occupancy, and low estimates of occupancy and colonization of non-forest. These species survive in forest but are unlikely to venture out into open, non-forested habitats, therefore, they are vulnerable to the effects of habitat loss and fragmentation. Our hierarchical community-level model can be used to estimate species-specific occupancy dynamics for focal and inter-patch matrix habitats to identify which species within a community are likely to be impacted most by habitat loss and fragmentation. This model can be applied to other taxa (i.e. amphibians, mammals and insects) to estimate species and community occurrence dynamics in response to current environmental conditions and to make predictions in response to future changes in habitat configurations.