When applied at the individual patch level, the classic competition-colonization models of species coexistence assume that propagules of superior competitors can displace adults of inferior competitors (displacement competition). But if adults are invulnerable to displacement by propagules (as trees are to seeds), and propagules compete to replace adults that die for reasons independent of the outcome of juvenile competition (a lottery system), a competition-colonization trade-off alone is not able to produce coexistence. However, we show that coexistence is possible if patch density varies spatially, such that it becomes a niche axis. We also show how a dispersal-fecundity trade-off can partition variation in patch density. We discuss the application of these models to empirical systems. An important implication of communities coexisting via variation in patch density is that the amount of habitat loss necessarily interacts with the pattern of loss in affecting extinctions, invasions, and coexistence, in contrast to displacement competition models, for which the spatial pattern of loss is not important or is less important. Finally, with respect to mechanisms promoting coexistence, we suggest that trade-offs between different stages of colonization could be far more common in nature than a trade-off between competitive ability and colonization ability.