Habitat selection involves a series of decisions that are arguably the most important decisions that animals make and these decisions occur at multiple hierarchical spatial scales. Colonial-nesting birds face a unique challenge when selecting a nest site because each bird’s choices are severely constrained by other birds within their breeding colony. Individuals must seek out optimum nesting locations within the constraint of the colony’s geographic location. We investigated how water depth and proximity to open water affected 4th-order nest-site selection of Western and Clark’s Grebes (Aechmophorus occidentalis, Aechmophorus clarkii), colonial nesting waterbirds that have declined in abundance across their range. We used an orthomosiac that we created from ~ 500 aerial drone images of a large breeding colony to construct a Resource Selection Function to describe microhabitat features that influence nest-site placement within the colony footprint. Grebes preferred to nest in portions of the colony with intermediate water depths (40-80 cm during nest construction) and they preferred to nest in portions of the colony furthest from open water. Understanding how individual birds make use of available microhabitat features within the footprint of their breeding colony can help inform conservation efforts of colonial-nesting birds, particularly for species that nest in wetland habitats whose water levels are managed for human use.