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In SharePoint Online, there is a "+ Create Site" button that allows users to create sites, in our case configured to create them under /sites.

We don't want end users being able to create sites at this time, only administrators.

In the SharePoint Admin Center, it has a setting "Subsite Creation" with options:

  • Hide the subsite menu command
  • Show the subsite menu command to users who have permission to create sites

1) If I hide this button, it is hidden for EVERYONE, including administrators. How do admins create sites under /sites when this is hidden?

2) When it says "users who have permission to create sites", where or how is this permission given or taken away? Is this tied to O365 Group creation?

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As per the documentation it is depend upon group creation permission. As per the Office documentation, below are the options:

  • A site with an Office 365 group or a classic site: Use this option to let users who don’t have permission to create a group still create classic sites
  • A site with an Office 365 group: Use this option to allow only users who have permission to create groups to create sites.
  • A classic site: Use this option to allow users to create only default classic sites or sites from your custom form.

    Manage site creation in SharePoint Online

I think you have to decide the group creation permission. how to manage the group creation activity, please read this support blog from office. Manage who can create Office 365 Groups

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There are a few options:

  1. Leave the ability to create sites turned off for all users, and have admins create sites for users via the admin center (or powershell)
  2. Turn on the ability to create sites for all users
  3. Turn on the ability to create sites for some users by upgrading to Azure AD Premium, and following the instructions in the article linked by Waqas.

Regarding the admin center, just go to the Groups section and create an Office 365 Group. Creating a group will create an associated team site. Or, create the Team site via powershell. This article documents several code-based methods to create a modern team site, including powershell.

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