EXHIBIT 13
                                
                  Commercial Properties 3, L.P.
                1996 Annual Report to Unitholders

     
     
Commercial Properties 3, L.P. (the "Partnership"), is a limited partnership
formed in 1984 to acquire, operate and hold for investment commercial real
estate properties.  The Partnership's investments are comprised of three office
buildings located in Dallas, Texas; Little Rock, Arkansas; and Fort Myers,
Florida, and a combined office/warehouse and office/showroom property located
in Fort Lauderdale, Florida.  Provided below is a comparison of lease levels at
the properties as of December 31, 1996 and 1995.

     
                                                               Percentage
                                                                 Leased
  Property                         Location                   1996      1995
  Metro Park Executive Center      Fort Myers, FL              81%       78%
  Fort Lauderdale Commerce Center  Fort Lauderdale, FL         85%       88%
  Three Financial Centre           Little Rock, AR             94%       94%
  Quorum II Office Building        Dallas, TX                  84%       98%
     
     
     
     


         Administrative Inquiries       Performance Inquiries/Form 10-Ks
         Address Changes/Transfers      First Data Investor Services Group
         Service Data Corporation       P.O. Box 1527
         2424 South 130th Circle        Boston, Massachusetts 02104-1527
         Omaha, Nebraska 68144-2596     Attn:  Financial Communications
         800-223-3464                   800-223-3464




                      Message to Investors

We are pleased to present the 1996 Annual Report for Commercial Properties 3,
L.P. (the "Partnership").  Included in this report is a review of national
market conditions, an update of Partnership operations, and financial
highlights for the year. Please refer to the Property Profiles & Leasing Update
section of this report for additional information regarding local market
conditions for each of the Partnership's properties, as well as their operating
performance and lease levels at December 31, 1996.

Market Overview

The commercial office market continued to recover throughout the year,
particularly in the suburban office sector.  Suburban office vacancy rates
declined to approximately 11% at year-end 1996 versus approximately 15% a year
earlier.  Overall, demand for office space continues to increase, bringing
about continually lower vacancy rates and, in many regions of the country,
enabling property owners to raise rental rates. Accordingly, the availability
of financing for investment in this sector has also improved.  Conditions in
the markets where the Partnership's properties are located generally paralleled
those in the national market, and three of the Partnership's four properties
reported stable occupancy rates at year-end 1996.

In view of these ongoing improvements in the real estate and capital markets,
we believe that the current favorable environment may present opportunities to
sell the Partnership's properties.  As a result, the General Partners
anticipate marketing for sale at least one of the properties in 1997 as various
leasing issues are resolved.  It should be noted that there can be no assurance
that any of the Partnership's future marketing efforts will result in a sale of
a property.

Cash Distributions

The Partnership paid cash distributions to Limited Partners totaling $25.30 per
Unit for the year ended December 31, 1996, including a fourth quarter cash
distribution of $3.00 per Unit that was either credited to your brokerage
account or sent directly to you on February 14, 1997.  Since inception, the
Partnership has paid total cash distributions of $161.81 per original $500
Unit, including $16 per Unit in return of capital payments which have reduced
the Unit size from $500 to $484.  The timing and amount of future cash
distributions will be determined quarterly and will depend on the adequacy of
the Partnership's cash flow and cash reserve requirements.

Cash Distributions Per Limited Partnership Unit

               First      Second       Third       Fourth
             Quarter     Quarter     Quarter      Quarter       Total
1995          $2.50       $2.50       $3.25        $5.00        $13.25
1996         $16.30*      $3.00       $3.00        $3.00        $25.30

*  Includes a special cash distribution of $13.30 per Unit paid
   on March 29, 1996.



General Information

As you are probably aware, several third parties have commenced partial tender
offers to purchase units of the Partnership at prices which are substantially
below the Partnership's Net Asset Value.  In response to these offers, we have
recommended that limited partners reject these offers because they do not
reflect the underlying value of the Partnership's assets.  According to
published industry sources, most investors who hold units of limited
partnerships similar to the Partnership have rejected these types of tender
offers due to their inadequacy.  Please be assured that if any additional
tender offers are made for your units, we will make every effort to provide you
with our position regarding those offers on a timely basis.

Summary

In the coming year the General Partners will explore opportunities to sell the
Partnership's properties.  Additionally, we will continue to focus on leasing
vacant space and renewing any leases which are scheduled to expire in 1997 so
as to further improve the properties' sales opportunities.  We will keep you
apprised of significant developments affecting your investment in future
reports.

Very truly yours,

Real Estate Services VII, Inc.           Hogan Stanton Investment, Inc.
General Partner                          General Partner of HS Advisors III,
Ltd.

/s/Kenneth L. Zakin                      /s/Mark P. Mikuta

Kenneth L. Zakin                        Mark P. Mikuta
Executive Vice President                President

March 21, 1997





               Property Profiles & Leasing Update


METRO PARK EXECUTIVE CENTER  Fort Myers, Florida
Metro Park Executive Center is situated in a suburban office park just east of
the Fort Myers central business district in the Edison Central submarket.  The
property is one of five class "A" commercial office buildings located within
the office park.  The property contains 60,597 leasable square feet of
commercial office space.

Leasing Update - The General Partners executed one new lease representing 1,212
square feet and two three-year lease renewals representing 3,933 square feet in
1996.  In addition, a tenant occupying 4,773 square feet, whose lease expired
in December 1996, extended its lease for ten years.  As a result, the property
was 81% leased at December 31, 1996, compared with 78% at year-end 1995.  None
of the property's tenants generated rental income in excess of 10% of the
Partnership's consolidated rental income.  Six leases totaling 24,844 square
feet or approximately 41% of the property's space are scheduled to expire
during 1997, including one lease for 16,517 square feet.

Fort Myers Market Update - The Fort Myers commercial office market improved
during 1996 and vacancy rates declined to approximately 12% for the fourth
quarter of 1996, down from approximately 14% for the fourth quarter of 1995.
While the Edison Central submarket was adversely impacted by the relocation of
several tenants during 1995 outside of the market, the area rebounded during
1996 as vacancy rates for commercial office space declined to approximately 15%
at year-end 1996 from approximately 17% at year-end 1995.  Rental rates
increased slightly and are expected to rise further during the upcoming year.


FORT LAUDERDALE COMMERCE CENTER Fort Lauderdale, Florida
Fort Lauderdale Commerce Center contains 186,884 leasable square feet of
office/showroom and office/warehouse space.  The property is located in the
Cypress Creek submarket in the north central section of Broward County,
approximately five miles north of the central business district of Fort
Lauderdale.

Leasing Update - During the year, the General Partners executed one new lease
representing 5,428 square feet and two lease renewals totaling 14,615 square
feet.  One tenant, leasing a total of 6,425 square feet pursuant to two leases
originally scheduled to expire in July 1996, extended its leases until October
1997.  Another tenant, leasing 6,000 square feet, who's lease expired during
the fourth quarter, vacated its space in December 1997.  As a result, the
property was 85% leased at year- end 1996 compared with 88% at year-end 1995.
None of the property's tenants accounted for 10% or more of the Partnership's
consolidated rental income.  The General Partners continue to aggressively
market the property's vacant space.  During 1997, six leases representing
28,040 square feet or approximately 15% of the property's leasable space, are
scheduled to expire.  These tenants have been contacted by the General Partners
to discuss the renewal of their leases, however, it is uncertain whether they
will renew.

Fort Lauderdale Market Update - The Broward County office market remained
stable during 1996, ranking among the top markets nationwide.  Recent economic
indicators, such as the area's low 4% unemployment rate, have contributed to
the county's strong position.  The vacancy rate for office/service space in
Broward County was relatively unchanged from the previous year, and decreased
slightly to 7% as of year-end 1996 compared with 7.5% as of year-end 1995.  In
keeping with these strong conditions, rental rates increased by approximately
12% over the year and the use of rental concessions has been eliminated.  The
Cypress Creek market, situated in north central Broward County, also benefited
from the relatively strong office environment and the vacancy rate for
office/service space decreased to 7.8% as of the 1995 fourth quarter, from
12.1% a year earlier.  General market conditions are expected to remain healthy
in 1997.


THREE FINANCIAL CENTRE  Little Rock, Arkansas
Three Financial Centre is a 123,833 leasable square foot, eight- story brick
office building situated in the Financial Centre Complex located in west Little
Rock.  The property affords easy access to downtown Little Rock and the Little
Rock Regional Airport, and is located near two interstate highways, I-630 and
I- 430.

Leasing Update - At December 31, 1996, the property's lease level was 94%,
unchanged from December 31, 1995.  During the year, the General Partners
executed two new leases totaling 2,858 square feet and two new short-term
leases totaling 1,284 square feet.  The General Partners also re-leased 6,533
square feet of the property's vacant space to an existing tenant, which
expanded its space to a total of 12,240 square feet and extended its lease for
three years.  Additionally, two tenants expanded their spaces by a total of
3,205 square feet and renewed their respective leases. However, three tenants
leasing a total of 10,580 square feet vacated the premises upon the expiration
of their leases during 1996.  None of the property's tenants accounted for 10%
or more of the Partnership's consolidated rental income.  A tenant leasing
4,747 square feet pursuant to a lease that expired on January 31, 1997, vacated
its space.  No other leases are scheduled to expire during 1997.

Market Update - The Little Rock office market remained relatively stable during
the year and the area's overall vacancy rate for office properties remained at
10% for year-end 1996, unchanged from a year earlier.  The leasing environment
in west Little Rock, the submarket where Three Financial Centre is located,
remained very competitive during the year, primarily due to the construction of
three new commercial office buildings which were completed in late 1996 and
early 1997.  Nevertheless, the west Little Rock office market improved during
1996 as evidenced by a decrease in the area's overall vacancy rate for office
properties to 6% at year-end 1996 from 8% at year-end 1995.  As a result,
rental rates increased and property values continued to rise.

As a result of the favorable market conditions combined with the property's
stabilized operations, the General Partners will evaluate potential sales
opportunities during 1997.


QUORUM II OFFICE BUILDING  Dallas, Texas
Quorum II Office Building is located in the LBJ/Quorum submarket in
northwestern Dallas.  The property contains 84,094 leasable square feet of
commercial office space and affords easy access to Loop 635, Dallas Parkway,
the Dallas North Tollway and Inwood Road.

Leasing Update - The General Partners executed two new leases totaling 7,290
square feet during 1996. Additionally, two tenants leasing a total of 10,622
square feet whose leases expired during the year, continue to occupy their
respective spaces on a month- to-month basis.  However, a tenant leasing 14,175
square feet vacated its space upon the expiration of its lease in November
1996.  As a result, the property was 84% leased at December 31, 1996 compared
with 98% at December 31, 1995.  None of the property's tenants accounted for
10% or more of the Partnership's consolidated rental income.  Seven leases
representing 28,251 square feet or approximately 34% of the property's leasable
area are scheduled to expire in 1997.  These tenants have been contacted by the
General Partners to discuss the renewal of their leases, however, it is
uncertain whether they will renew or extend their terms.

Dallas Market Update - The Dallas commercial real estate market continued to
improve in 1996 driven primarily by the region's continued strong employment
growth.  The area's healthy business climate, low tax rate and high quality of
life have led to a steady migration of companies to the region, increasing
demand for office space.  The LBJ/Quorum submarket, where the property is
located, benefited from these conditions, as evidenced by a decrease in the
submarket's vacancy rate to 6% at year-end 1996, compared with 9% a year
earlier.  Additionally, rental rates increased by approximately 10% in 1996 and
property values have risen.


                              Financial Highlights


For The Years Ended December 31,
(dollars in thousands except per Unit data)

                                 1996      1995      1994      1993      1992
Total income                  $ 5,279   $ 5,158   $ 4,691   $ 4,211   $ 4,034
Net income (loss)                 568    (3,631)     (332)     (910)     (712)
Total assets                   25,364    27,842    32,837    33,454    35,220
Net cash from operations        2,560     2,168     1,859     1,536     1,592
Net income (loss) per Unit       4.09    (32.87)    (3.00)    (8.24)    (6.45)
Cash distributions per
    Limited Partnership Unit    25.30(1)  13.25      5.50      4.00     14.00

(1)  Includes a special cash distribution of $13.30 per Unit paid on March 29,
     1996.

The above selected financial data should be read in conjunction with the
consolidated financial statements and related notes included in this report.

- The change to net income in 1996 from net loss in 1995 is primarily
  attributable to a $3,928,998 loss recognized in 1995 on the write down of the
  Quorum II Office Building, implemented in compliance with Statement of
  Financial Accounting Standards No. 121 "Accounting for the Impairment of
  Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".  The net
  income is also attributable to lower depreciation and amortization and higher
  rental income 1996.

- Net cash from operations increased in 1996 primarily due to higher net
  income.



Consolidated Balance Sheets                   At December 31,   At December 31,
                                                        1996              1995
Assets
Property:
 Land                                           $  5,808,694      $  5,808,694
 Buildings, building improvements and equipment   30,831,532        31,446,737
                                                  36,640,226        37,255,431
 Less accumulated depreciation                   (13,546,913)      (12,714,080)
                                                  23,093,313        24,541,351

Cash and cash equivalents                          1,228,502         2,134,370
Restricted cash                                      232,330           237,566
Accounts and rent receivable, net of
 allowance for doubtful accounts of
 $5,444 in 1996 and $5,486 in 1995                    40,090            64,616
Deferred rent receivable                             205,718           230,626
Prepaid leasing costs and other assets,
 net of accumulated amortization of $805,502
 in 1996 and $900,609 in 1995                        563,611           633,476
  Total Assets                                  $ 25,363,564      $ 27,842,005
Liabilities and Partners' Capital (Deficit)
Liabilities:
 Accounts payable and accrued expenses          $    249,517      $    257,185
 Due to affiliates                                     5,941             8,479
 Distributions payable                               338,282           563,804
 Security deposits payable                           215,026           214,388
  Total Liabilities                                  808,766         1,043,856
Minority Interest                                    263,477           221,337

Partners' Capital (Deficit):
 General Partners                                   (368,069)         (402,866)
 Limited Partners (109,378 units outstanding)     24,659,390        26,979,678
  Total Partners' Capital                         24,291,321        26,576,812
  Total Liabilities and Partners' Capital       $ 25,363,564      $ 27,842,005




Consolidated Statements of Partners' Capital (Deficit)
For the years ended December 31, 1996, 1995 and 1994
                                            General       Limited
                                           Partners      Partners         Total
Balance at December 31, 1993              $(299,811)  $32,953,585   $32,653,774
Net Loss                                     (3,315)     (328,219)     (331,534)
Distributions                               (18,606)     (601,579)     (620,185)
Balance at December 31, 1994               (321,732)   32,023,787    31,702,055
Net Loss                                    (36,312)   (3,594,850)   (3,631,162)
Distributions                               (44,822)   (1,449,259)   (1,494,081)
Balance at December 31, 1995               (402,866)   26,979,678    26,576,812
Net Income                                  120,389       447,248       567,637
Distributions                               (85,592)   (2,767,536)   (2,853,128)
Balance at December 31, 1996              $(368,069)  $24,659,390   $24,291,321



Consolidated Statements of Operations
For the years ended December 31,                  1996         1995        1994
Income
Rental                                      $5,209,134  $ 5,047,528  $4,641,823
Interest                                        69,645      110,529      49,446
  Total Income                               5,278,779    5,158,057   4,691,269
Expenses
Property operating                           2,291,679    2,283,025   2,231,683
Loss on write-down of real estate                    -    3,928,998           -
Depreciation and amortization                2,074,246    2,278,567   2,388,925
General and administrative                     269,716      248,607     240,074
Bad debt                                        33,361            -      77,710
  Total Expenses                             4,669,002    8,739,197   4,938,392
Net income (loss) before minority interest     609,777   (3,581,140)   (247,123)
Minority interest                              (42,140)     (50,022)    (84,411)

  Net Income (Loss)                         $  567,637  $(3,631,162) $ (331,534)
Net Income (Loss) Allocated:
To the General Partners                     $  120,389  $   (36,312) $   (3,315)
To the Limited Partners                        447,248   (3,594,850)   (328,219)
                                            $  567,637  $(3,631,162) $ (331,534)
Per limited partnership unit
(109,378 outstanding)                            $4.09      $(32.87)     $(3.00)




Consolidated Statements of Cash Flows
For the years ended December 31,                 1996         1995         1994
Cash Flows From Operating Activities
Net Income (Loss)                         $   567,637  $(3,631,162)  $ (331,534)
Adjustments to reconcile net income(loss)
to net cash provided by operating
activities:
 Minority interest                             42,140       50,022       84,411
 Loss on write-down of real estate                  -    3,928,998            -
 Depreciation                               1,834,784    2,062,083    2,173,508
 Amortization                                 239,462      216,484      215,417
 Increase (decrease) in cash arising
 from changes in operating assets and
 liabilities:
  Restricted cash                               5,236      (21,487)      (3,925)
  Accounts and rent receivable, net            24,526      (36,290)     112,971
  Deferred rent receivable                     24,908        4,620     (136,873)
  Notes receivable                                  -            -       51,403
  Prepaid leasing costs and other assets     (169,597)    (203,967)    (237,210)
  Accounts payable and accrued expenses        (7,668)    (210,984)     (91,761)
  Due to affiliates                            (2,538)        (696)       5,139
  Security deposits payable                       638        9,923       17,235
Net cash provided by operating activities   2,559,528    2,167,544    1,858,781
Cash Flows From Investing Activities
 Additions to real estate                    (386,746)    (458,496)    (504,597)
Net cash used for investing activities       (386,746)    (458,496)    (504,597)
Cash Flows From Financing Activities
 Cash distributions                        (3,078,650)  (1,212,179)    (451,044)
Net cash used for financing activities     (3,078,650)  (1,212,179)    (451,044)
Net increase (decrease) in cash and cash
 equivalents                                 (905,868)     496,869      903,140
Cash and cash equivalents, beginning of
 period                                     2,134,370    1,637,501      734,361
Cash and cash equivalents, end of period  $ 1,228,502  $ 2,134,370  $ 1,637,501
Supplemental Schedule of Non-Cash
Investing Activity:
 Additions to real estate assets
 capitalized but unpaid at end of period  $         -  $         -  $   150,247



Notes to the Consolidated Financial Statements
December 31, 1996, 1995 and 1994

1. Organization
Commercial Properties 3, L.P. (the "Partnership") was organized as a limited
partnership under the laws of the Commonwealth of Virginia pursuant to a
Certificate and Agreement of Limited Partnership dated and filed April 19, 1984
(the "Partnership Agreement").  The Partnership was formed for the purpose of
acquiring and operating certain types of commercial real estate. The General
Partners of the Partnership are Real Estate Services VII, Inc. ("Real Estate
Services"), formerly Hutton Real Estate Services VII, Inc. , which is an
affiliate of Lehman Brothers Inc. ("Lehman Brothers") and HS Advisors III, Ltd.
("HS Advisors"), which is an affiliate of Goodman Segar Hogan, Inc. The
Partnership will continue until December 31, 2010, unless terminated sooner in
accordance with the terms of the Partnership Agreement.

On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic
retail brokerage and asset management businesses to Smith Barney, Harris Upham
& Co. incorporated ("Smith Barney"). Subsequent to the sale, Shearson Lehman
Brothers Inc. changed its name to Lehman Brothers Inc.  The transaction did not
affect the ownership of the General Partners.  However, the assets acquired by
Smith Barney included the name "Hutton."  Consequently, effective October 22,
1993, the Hutton Real Estate Services VII, Inc. General Partner changed its
name to delete any reference to Hutton.  Additionally, effective August 3,
1995, the Partnership changed its name to Commercial Properties 3, L.P., to
delete any reference to "Hutton."

On March 15, 1996, based upon, among other things, the advice of legal counsel,
Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution
that states, among other things, if a Change of Control (as defined below)
occurs, the General Partners may distribute the Partnership's cash balances not
required for its ordinary course day-to-day operations.  "Change of Control"
means any purchase or offer to purchase more than 10% of the Units that is not
approved in advance by the General Partners.  In determining the amount of the
distribution, the General Partners may take into account all material factors.
In addition, the Partnership will not be obligated to make any distribution to
any partner and no partner will be entitled to receive any distribution until
the General Partners have declared the distribution and established a record
date and distribution date for the distribution.

2. Significant Accounting Policies

Basis of Accounting - The accompanying financial statements have been prepared
on the accrual basis of accounting in accordance with generally accepted
accounting principles.  Revenues are recognized as earned and expenses are
recorded as obligations are incurred.

Consolidation - The consolidated financial statements include the accounts of
the Partnership and its ventures, Metro Park Associates Joint Venture ("Metro
Park"), Three Financial Centre Joint Venture ("Three Financial Centre"), and
14850 Quorum Associates, Ltd. ("Quorum").  Intercompany accounts and
transactions between the Partnership and the ventures are eliminated in
consolidation.

Real Estate Investments - Real estate investments, which consist of commercial
buildings and capital improvements (the "Properties"), are recorded at cost,
which includes the initial purchase price of the property plus closing costs,
acquisition and legal fees and other miscellaneous acquisition costs.
Depreciation is computed using the straight-line method based upon the
estimated useful lives of 3 to 25 years except for tenant improvements which
are depreciated over the terms of the respective leases.

Accounting for Impairment - In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" ("FAS 121") which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount.  FAS 121 also addresses the accounting
for long- lived assets that are expected to be disposed of.  Pursuant to this
issuance, the Partnership implemented FAS 121 in the fourth quarter of 1995.
The effect of the adoption was the recognition of an impairment loss on the
Partnership's investments in real estate in 1995 in the amount of $3,928,998
(see note 4).

Cash Equivalents - Cash equivalents consist of short-term highly liquid
investments which have maturities of three months or less from the date of
purchase.  The carrying amount approximates fair value because of the short
maturity of these instruments.

Restricted Cash - Restricted cash consists of amounts held for tenant security
deposits.

Concentration of Credit Risk - Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
in excess of the financial institution's insurance limits.  The Partnership
invests available cash with high credit quality financial institutions.

Deferred Rent Receivable - Deferred rent receivable consists of rental income
which is recognized on a straight-line basis over the terms of the respective
leases even though rent is not received until later periods as a result of
rental escalations.

Prepaid Leasing Costs - Leases are accounted for as operating leases.  Leasing
commissions are amortized over the terms of the respective leases.

Income Taxes - No provision for income taxes has been made in the financial
statements of the Partnership since such taxes are the responsibility of the
individual partners rather than of the Partnership.

Fair Value of Financial Instruments - Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments "
("FAS 107"), requires that the Partnership disclose the estimated fair values
of its financial instruments.  Fair values generally represent estimates of
amounts at which a financial instrument could be exchanged between willing
parties in a current transaction other than in forced liquidation. Fair value
estimates are subjective and are dependent on a number of significant
assumptions based on management's judgment regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors.  In addition, FAS 107 allows a wide
range of valuation techniques, therefore, comparisons between entities, however
similar, may be difficult.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

Reclassifications - Certain prior year amounts have been reclassified in order
to conform to the current year's presentation.

3. Partnership Agreement
The Partnership agreement provides that net cash from operations, as defined,
will be distributed on a quarterly basis as follows: 97% to the Limited
Partners and 3% to the General Partners until each Limited Partner has received
a 9% annual noncumulative return on his adjusted capital investment, as
defined.  The net cash from operations will then be distributed to the General
Partners until the General Partners have received 10% of the aggregate net cash
from operations distributed to all partners. The balance of net cash from
operations, if any, will then be distributed 90% to the Limited Partners and
10% to the General Partners.

Net proceeds from sales or refinancings shall be distributed as follows: 99% to
the Limited Partners and 1% to the General Partners until each Limited Partner
has received an amount equal to his adjusted capital investment, as defined,
and a 10% cumulative annual return thereon, reduced by any net cash from
operations actually distributed to such Limited Partner.  The balance of net
proceeds, if any, will then be distributed 85% to the Limited Partners and 15%
to the General Partners.

Losses and all depreciation for any fiscal year shall be allocated 99% to the
Limited Partners and 1% to the General Partners.

If income exceeds the amount of net cash from operations distributable to the
Partners for any fiscal year, the excess will be allocated (1) 100% to the
General Partners in an amount equal to the excess, if any, of General Partners'
deficit in their capital accounts, over an amount equal to 1% of the total
capital contributions to the Partnership as reduced by the amount of the
General Partners' capital contributions and (2) 99% to the Limited Partners and
1% to the General Partners.  If income does not exceed the amount of net cash
from operations distributable to the Partners for any fiscal year, income will
be allocated 90% to the Limited Partners and 10% to the General Partners.

Upon the dissolution of the Partnership, the General Partners shall contribute
to the capital of the Partnership, an amount not to exceed 1% of the total
capital contributions made by all the Partners, less any prior capital
contributions made by the General Partners.  In no event shall the General
Partners be obligated to contribute an amount in excess of any negative balance
in their respective capital accounts.

If as a result of the dissolution of the Partnership, the sum of the Limited
Partners' capital contribution plus an amount equal to a 6% cumulative annual
return on each Limited Partner's adjusted capital value less any distributions
made to each Limited Partner from net cash flow from operations, exceeds total
distributions to the Limited Partners of net proceeds from a sale or
refinancing, the General Partners will contribute to the Partnership for
distribution to the Limited Partners an amount equal to the lesser of such
excess or the aggregate distribution of net proceeds from a sale or refinancing
distributed to the General Partners.

4. Real Estate Investments
Since inception, the Partnership has acquired, directly or indirectly, the
following three commercial office buildings and an office and light industrial
complex.  The purchase price amounts exclude acquisition fees and other closing
costs.

                       Net
                    Leasable
                     Square                 Date       Type of       Purchase
Property Name         Feet    Location    Acquired    Ownership       Price

Metro Park                    Fort Myers,               Joint
Executive Center    60,597    Florida      1/17/85      Venture     $ 5,136,504

Three Financial               Little Rock,              Joint
Centre             123,833    Arkansas     1/22/85      Venture     $10,452,005

Fort Lauderdale               Fort Lauderdale,           Fee
Commerce Center    186,884    Florida      4/18/85       Simple     $12,843,569

Quorum II                     Dallas,
Office Building     84,094    Texas        6/12/85       (A)        $12,995,384



(A) The Partnership is the General Partner in a Limited Partnership.

The Joint Venture and Limited Partnership agreements substantially provide
that:

i.   Net cash from operations will be distributed 100% to the Partnership until
     it has received an    annual, noncumulative return on its adjusted capital
     balance, as defined, of 10.5% for Three     Financial Centre, 12% for
     Metro Park, and 10% for Quorum.  With regard to Three Financial Centre,
     net cash from operations will then be distributed 100% to the co-venturer
     until it has   received an annual amount of $115,000. Thereafter, any
     remaining net cash from operations will     be distributed 80% to the
     Partnership and 20% to the respective co- venturers.

ii.  Net proceeds from a refinancing or other interim capital transaction of
     the properties will be   distributed 100% to the Partnership until it has
     received 115% of its capital contribution and a  cumulative return of
     10.5% for Three Financial Centre, 12% for Metro Park, and 10% for
     Quorum on its adjusted capital investment, as defined.  With regard to
     Three Financial Centre,  net proceeds will then be distributed 100% to the
     co-venturer until it has received $1,100,000. Thereafter, any remaining
     net proceeds will be distributed in amounts ranging from 75% to 80%    to
     the Partnership and the balance to the respective co-venturers.

iii. Net proceeds from a sale of the properties will generally be distributed
     to the venturers, pro rata  in accordance with each venturer's capital
     account balance.

iv.  Income will be allocated in substantially the same manner as net cash from
     operations.  For     Three Financial Centre and Metro Park, net income in
     excess of net cash from operations distributed in such year shall be
     allocated 80% to the Partnership and 20% to the co-venturers.     Losses
     and all depreciation will generally be allocated 100% to the Partnership.

During the fourth quarter of 1995, management evaluated its plans for the
Quorum II Office Building ("Quorum II").  At such time, management concluded
that it may not hold Quorum II for a period sufficient for rental rates to
improve and the Partnership to recover its December 31, 1995 carrying value. As
a consequence of this decision, and pursuant to the requirements of FAS 121,
the Partnership recognized an impairment loss of $3,928,998 to write down
Quorum II to it estimated fair value of $4.6 million as of December 31, 1995.
The loss is reflected as a loss on the write-down of real estate in the
accompanying consolidated statement of operations.  Fair value was determined
using an independent appraisal of the operating property, which is consistent
with that used to determine the Partnership's Net Asset Value.  Such appraisals
make use of a combination of certain generally accepted valuation techniques,
including direct capitalization, discounted cash flows and comparative sales
analysis.

5. Rental Income Under Operating Leases
Future minimum rental income to be received on noncancellable operating leases
as of December 31, 1996 is as follows:

                 1997            $ 3,640,026
                 1998              2,478,158
                 1999              1,529,119
                 2000              1,723,324
                 2001                526,642
                 Thereafter          328,211
                                 $10,225,480

Generally, leases are for terms of 2 to 10 years and contain renewal options.
The leases allow for increases in certain property operating costs to be passed
on to the tenants.

6. Transactions with General Partners and Affiliates
The following is a summary of amounts earned by, or reimbursed to, the General
Partners and their affiliates for property management fees and out-of-pocket
expenses during the years ended December 31, 1996, 1995 and 1994:

                              Unpaid at                    Earned
                           December 31,
                                   1996         1996        1995         1994
Real Estate Services and
affiliates
Out-of-pocket expenses           $3,175      $12,895     $     -      $20,951

HS Advisors and affiliates
  Out of pocket expenses              -        6,039           -        7,275
  Property management fees (GSH)  2,766       32,219      31,815       30,291
                                 $5,941      $51,153     $31,815      $58,517


7. Reconciliation of Financial Statement Net Loss to Federal Income Tax Basis
   Net Income (Loss)
                                                  Years Ended December 31,
                                               1996          1995        1994
Financial statement net income (loss)     $ 567,637   $(3,631,162)  $(331,534)
Tax basis depreciation over
  financial statement depreciation         (224,715)       (8,921)   (192,309)
Write-down of real estate                         -     3,928,998           -
Deferred rent                                   212        23,757     (82,128)
Minority interest adjustment                (12,041)        3,343      10,133
Prepaid rent                                      -       (47,283)     48,674
Bad debt expense                                (42)            -         134
Federal income tax basis
  net income (loss)                       $ 331,051   $   268,732   $(547,030)





                         Report of Independent Auditors


                 
The Partners
Commercial Properties 3, L.P.
and Consolidated Ventures


We have audited the accompanying consolidated balance sheets of Commercial
Properties 3, L.P. and Consolidated Ventures as of December 31, 1996 and 1995,
and the related consolidated statements of operations, partners' capital
(deficit) and cash flows for each of the three years in the period ended
December 31, 1996.  These financial statements are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above represent fairly, in
all material respects, the consolidated financial position of Commercial
Properties 3, L.P. and Consolidated Ventures at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepting accounting principles.

As discussed in Note 2 to the financial statements, in 1995 the Partnership
changed its method of accounting for impairment of long-lived assets.



                                                        ERNST & YOUNG LLP

Boston, Massachusetts
February 3, 1997




                              Net Asset Valuation

  Comparison of Acquisition Costs to Appraised Value and Determination of
  Net Asset Value Per $484 Unit at December 31, 1996 (Unaudited)
                                
                                
                                                   Acquisition   1996 Appraised
Property                    Date of Acquisition       Cost (1)        Value (2)
Metro Park Executive Center            01-17-85    $ 5,543,159      $ 3,600,000
Three Financial Centre                 01-22-85     11,378,512       11,800,000
Fort Lauderdale Commerce Center        04-18-85     14,125,050       11,400,000
Quorum II Office Building              06-12-85     13,939,093        6,200,000
                                                   $44,985,814      $33,000,000

Cash and cash equivalents                                             1,228,502
Accounts and rent receivable                                             40,090
                                                                     34,268,592
Less:
  Accounts payable and accrued expenses                                (249,517)
  Due to affiliates                                                      (5,941)
  Distribution payable                                                 (338,282)
  Minority Interest                                                    (263,477)

Partnership Net Asset Value (3)                                     $33,411,375

Net Asset Value Allocated:
  Limited Partners                                                  $33,077,261
  General Partners                                                      334,114
                                                                    $33,411,375
Net Asset Value Per Unit
    (109,378 units outstanding)                                        $ 302.41

(1)  The acquisition cost of each property is comprised of fundings made
     through December 31, 1996, the acquisition fee paid to the General
     Partners and an amount estimated to fund the completion of tenant
     improvements.

(2)  This represents the Partnership's share of the December 31, 1996 Appraised
     Values which were determined by an independent property appraisal firm.
     The Partnership's share of the December 31, 1996 Appraised Values takes
     into account the allocation provisions of the Joint Venture and Limited
     Partnership Agreements governing the distribution of sales proceeds for
     each of the above properties.

(3)  The Net Asset Value assumes a hypothetical sale at December 31, 1996 of
     all Partnership properties at their appraised values and the distribution
     of the proceeds of such sales, together with the Partnership's cash and
     the proceeds from temporary investments, to the Partners.  Real estate
     brokerage commissions payable to the General Partners or others are not
     determinable at this time and have not been included in the determination.
     Since the Partnership would incur real estate brokerage commissions and
     other selling expenses in connection with the sale of its properties and
     other assets, cash available for distribution to the Partners would be
     less than the appraised Net Asset Value.

Limited Partners should note that appraisals are only estimates of current
value and actual values realizable upon sale may be significantly different.  A
significant factor in establishing an appraised value is the actual selling
price for properties which the appraiser believes are comparable.  Further, the
appraised value does not reflect the actual costs which would be incurred in
selling the property.  As a result of these factors and the illiquid nature of
an investment in Units of the Partnership, the variation between the appraised
value of the Partnership's properties and the price at which Units of the
Partnership could be sold is likely to be significant.  Fiduciaries of Limited
Partners which are subject to ERISA or other provisions of law requiring
valuation of Units should consider all relevant factors, including, but not
limited to Net Asset Value per Unit, in determining the fair market value of
the investment in the Partnership for such purposes.