In case there is no enough IP addresses in the subnet where your managed instance is provisioned, you will have to create new subnet and new managed instance inside it. We also suggest that new subnet is created with more IP addresses alocated so future update operations will avoid similar situation (for propper subnet size, check [how to determine size of vnet subnet](sql-database-managed-instance-determine-size-vnet-subnet.md). After new instance is provisioned, you can manually back up and restore data between the old and new instance or perform cross-instance [point-in-time restore](sql-database-managed-instance-point-in-time-restore.md?tabs=azure-powershell).
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