You can create a new folder under this heading by right-clicking or Ctrl+click on the On My Computer heading then select New Folder. In the folders list for your account in Outlook you should see a heading for folders labelled On My Computer. This guide will explain how to create a local folder within Outlook for Mac and archive messages from your IMAP mailbox to local storage on your computer. This will allow you to free up space in your mailbox without permanently deleting your messages.

If your IMAP mailbox is full or starting to approach the disk space capacity you may need to archive messages by copying them to an offline location on your computer.