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My model input is a point feature class with groups of points which need to be sorted according to their unit_id and then a Minimum_Bounding_Geometry tool run to generate a polygon for each unit_id which is then saved in a Feature Dataset.

This all works in the model attached except my input point layer is a projected UTM coordinate system. However the output polygons are not projected. The reason this matters is that I want to use the auto-generated shape_Area attribute value but for that value to be a sqm area, I believe I need it to be in a projected coordinate system. current model

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You say your output polygons are going into a Feature Dataset.

As per the documentation:

When creating a new feature dataset, you must define its spatial reference. This includes its coordinate system—either geographic or a specific projection—as well as coordinate units and tolerances for x,y; z-; and m-values. All feature classes in the same feature dataset must share a common coordinate system, and x,y coordinates of their features should fall within a common spatial extent.

Try setting the coordinate system in your Feature Dataset to a projected coordinate system.

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