Microsoft 365 Groups are the backbone of various Microsoft 365 workloads. As you might know, each group utilizes a SharePoint site collection, and an Exchange shared mailbox.
When you create a new Microsoft 365 group, SharePoint Online must store the associated site collection somewhere. SharePoint Online uses predefined paths to determine the storage location. These paths are called: Managed Paths.
SharePoint Online uses two different pre-configured managed paths:
With /sites as the default setting for the Microsoft 365 tenant.
Whenever you create, e.g., a new team in Microsoft Teams, the associated site collection is stored in https://TENANTNAME.sharepoint.com/sites/TEAMNAME. As a SharePoint administrator, you see the site collection paths in the list of active sites in the SharePoint Admin Center.
But what can you do, if you want to store the associated site collections in the /teams managed path?
The SharePoint Admin Center provides you with an option to change the managed path for sites, created by users.
Open the SharePoint Admin Center, navigate to Settings -> Site Creation.
Change the setting for Create team sites under to /teams/.
The description of this setting is misleading. This setting affects not only SharePoint team site creation initiated by users on the SharePoint start page or OneDrive, but site collections created by Microsoft 365 Groups as well.
You do not need to enable the checkbox to let users create sites from the SharePoint start page and OneDrive. This setting is only required, when you want to enable self-service site creation of modern SharePoint sites for users. The modern SharePoint sites are based on Microsoft 365 Groups.
After changing the path, SharePoint Online creates new associated site collections for Microsoft 365 Groups in /teams/.
Enjoy SharePoint Online.