SharePoint Storage Limit Warning

What To Do When You Hit 95% Capacity

When your Microsoft 365 tenant reaches the SharePoint storage limit, the impact is immediate. File uploads start failing, Teams sites stop provisioning, indexing slows down, and storage overage charges begin applying automatically. For organisations storing large volumes of documents, drawings, media files, or project data, hitting the SharePoint capacity threshold can become a recurring and expensive problem—especially when underlying retention policies prevent deletion.

How SharePoint Storage Allocation Works

Your tenant’s storage limit is determined by Microsoft 365 licensing:

10 GB base storage per tenant
+ 10 GB per licensed user

Example:

Licensed Users	Total SharePoint Storage Allocation
250 users	10 GB + (250 × 10 GB) = 2.51 TB
1,000 users	10 GB + (1,000 × 10 GB) = 10.01 TB
10,000 users	10 GB + (10,000 × 10 GB) = 100.01 TB

This storage is shared across:

SharePoint Online sites
Microsoft Teams files
OneDrive for Business accounts
The Preservation Hold Library (if retention or legal hold is enabled)

Over time, these workloads accumulate content faster than expected, especially in organisations with:

Project or engineering document repositories
Large Teams channels and video call recordings
Active retention / compliance policies
High staff turnover (departing user OneDrives pile up)
Multiple business units collaborating in shared libraries

What Happens When You Hit the SharePoint Storage Limit

When your storage consumption reaches 90–95%, you may see:

Symptom	Impact
Uploads fail or sync errors appear	Users can’t save files
New Teams/SharePoint sites fail to create	Collaboration is blocked
SharePoint search/indexing slows	Content becomes harder to find
Performance degradation in Teams/SharePoint	Daily operations affected
Microsoft begins billing storage overage fees	Recurring operational cost

Overage charges are not one-off—they continue every month.

Why Deleting Files Usually Doesn’t Work

Most organisations attempt deletion first. Two problems arise:

Retention policies prevent permanent deletion
Files go to the Preservation Hold Library, which still consumes storage.
Users can’t reliably determine what is safe to delete
Deletion risks breaking collaboration context, version history, and audit trails.

So even when large folders are removed, overall tenant storage doesn’t change.

Step 1: Identify Where Storage Is Being Consumed

Check Storage Usage in Microsoft 365 Admin Center

Go to SharePoint Admin Center
Select Sites → Active Sites
Sort by Storage Used

Look specifically for:

Hotspot	Storage Pattern
OneDrive of former employees	Large, unused, often years old
Project / department sites	Heavy media, drawings, reports
Teams collaboration sites	Files duplicated across channels
Preservation Hold Library	Hidden retained data growing silently

This analysis identifies where optimisation efforts provide immediate value.

Step 2: Address Departed Employee OneDrives (Fastest Storage Win)

When staff leave, their OneDrive is typically preserved for compliance reasons. Over time, this results in massive storage accumulation that provides no operational value.

Correct Approach (No Risk)

Export or archive the user’s OneDrive
Store it in long-term low-cost cloud storage
Remove the original OneDrive container from the tenant

This process instantly frees capacity.

Chipmunk automates this:

Archives departed user OneDrive, Exchange, and Teams data
Preserves metadata and searchability
Allows controlled, auditable access for investigation or continuity
Safely removes the original OneDrive to reclaim storage

More info: https://www.smikar.com/chipmunk-automated-user-archiving/

Step 3: Archive Inactive SharePoint Content Without Breaking Access

For SharePoint sites that contain old project or historical content, the goal is to move inactive files to cheaper storage while keeping them accessible.

The Archive Pattern That Works

Identify files older than X months
Move them to Azure Blob or cold storage
Leave a lightweight placeholder (stub) behind
Users can still open the file normally

This allows:

No change to user experience
No broken links
No permission changes
No retraining

This is the core function of Squirrel:

Automatically archives files from SharePoint to Azure Blob Storage
Leaves stub files so users access archived content as usual
Supports metadata retention, version history capture, and audit compliance
Reduces storage consumption significantly and permanently

More info: https://www.smikar.com/squirrel

Step 4: Prevent the Storage Problem from Returning

Once storage is stabilised:

Governance Task	Frequency
Archive inactive files	Monthly scheduled job
Auto-archive departing users	Triggered at license removal
Monitor storage trends	Monthly review
Lifecycle policies by library	Standard practice

This shifts the organisation from reactive cleanup to predictable storage lifecycle management.

Summary

Problem	Solution	Outcome
SharePoint storage limit reached	Identify largest storage locations	Visibility to act
Departed user OneDrives consuming storage	Archive using Chipmunk	Immediate storage recovery
Legacy data sitting in SharePoint	Archive to Azure with Squirrel	Lower storage cost, no user disruption
Storage continually grows	Apply automated lifecycle policies	Stable long-term storage costs

Frequently Asked Questions

Does Microsoft charge for storage overages?
Yes. Once your SharePoint storage allocation is exceeded, Microsoft bills monthly for additional storage consumed.

Will deleting files reduce SharePoint storage usage?
Not if retention policies or legal holds are enabled. Deleted files move to the Preservation Hold Library and still consume storage.

Can archived files still be opened from SharePoint?
Yes. With stub-based archiving (such as Squirrel), files open exactly as before.

How do we handle access to files from former employees?
Use an automated archiving solution like Chipmunk that preserves search and audit access while releasing OneDrive storage.

SharePoint Storage Limit Warning