SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-Q
(Mark One)

  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 1998
                               --------------
                                      OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the transition period from              to             
                               ------------    ------------
Commission file number 0-14353
                       -------

                    BALCOR REALTY INVESTORS 85-SERIES I
                     A REAL ESTATE LIMITED PARTNERSHIP         
          -------------------------------------------------------
          (Exact name of registrant as specified in its charter)

          Illinois                                      36-3244978    
-------------------------------                     -------------------
(State or other jurisdiction of                      (I.R.S. Employer  
incorporation or organization)                      Identification No.)

2355 Waukegan Road
Bannockburn, Illinois                                      60015   
-----------------------------------------           -------------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.


Yes   X    No     
    -----     -----
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                                BALANCE SHEETS
                     March 31, 1998 and December 31, 1997
                                  (Unaudited)

                                    ASSETS

                                                1998            1997
                                           --------------- ---------------
Cash and cash equivalents                  $    1,895,177  $    2,508,464
Accounts and accrued interest receivable           15,457          22,312
Prepaid expenses                                    2,442
                                           --------------- ---------------
                                           $    1,913,076  $    2,530,776
                                           =============== ===============

                  LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Accounts payable                           $       32,438  $       17,255
Due to affiliates                                  38,355          34,766
                                           --------------- ---------------
     Total liabilities                             70,793          52,021
                                           --------------- ---------------
Commitments and contingencies

Limited Partners' capital (82,697
  Interests issued and outstanding)             2,148,312       2,784,784
General Partner's deficit                        (306,029)       (306,029)
                                           --------------- ---------------
     Total partners' capital                    1,842,283       2,478,755
                                           --------------- ---------------
                                           $    1,913,076  $    2,530,776
                                           =============== ===============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
                for the quarters ended March 31, 1998 and 1997
                                  (Unaudited)

                                                1998            1997
                                           --------------- ---------------
Income:
  Rental and service                                       $      443,934
  Interest on short-term investments       $       27,778         124,005
                                           --------------- ---------------
    Total income                                   27,778         567,939
                                           --------------- ---------------

Expenses:
  Interest on mortgage notes payable                               99,717
  Lender participation                                          1,025,000
  Depreciation                                                     62,779
  Property operating                                6,519         263,437
  Real estate taxes                                                12,325
  Property management fees                                         17,151
  Administrative                                   81,333          98,760
  Participation in loss of joint
    venture with affiliate                                            527
                                           --------------- ---------------
    Total expenses                                 87,852       1,579,696
                                           --------------- ---------------
Loss before gain on sale of 
  property                                        (60,074)     (1,011,757)

Gain on sale of property                                       12,768,729
                                           --------------- ---------------
Net (loss) income                          $      (60,074) $   11,756,972
                                           =============== ===============
Net income allocated to General Partner              None  $       58,126
                                           =============== ===============
Net (loss) income allocated to Limited 
  Partners                                 $      (60,074) $   11,698,846
                                           =============== ===============
Net (loss) income per Limited Partnership 
  Interest (82,697 issued and outstanding)
  - Basic and Diluted                      $        (0.73) $       141.47
                                           =============== ===============
Distribution to Limited Partners           $      576,398  $   13,479,611
                                           =============== ===============
Distribution per Limited Partnership 
  Interests (82,697 issued and 
  outstanding)                             $         6.97  $       163.00
                                           =============== ===============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                           STATEMENTS OF CASH FLOWS
                for the quarters ended March 31, 1998 and 1997
                                  (Unaudited)

                                                1998            1997
                                           --------------- ---------------
Operating activities:
  Net (loss) income                        $      (60,074) $   11,756,972
  Adjustments to reconcile net (loss)
    income to net cash used in 
    operating activities:
    Gain on sale of property                                  (12,768,729)
    Participation in loss of joint 
       ventures with affiliates                                       527
    Depreciation of properties                                     62,779
    Net change in:
      Accounts and accrued interest
        receivable                                  6,855            (266)
      Prepaid expenses                             (2,442)         26,406
      Accounts payable                             15,183         156,496
      Due to affiliates                             3,589            (803)
      Accrued liabilities                                         (91,810)
      Security deposit                                            (62,326)
                                           --------------- ---------------
  Net cash used in operating
    activities                                    (36,889)       (920,754)
                                           --------------- ---------------
Investing activities:
  Distribution from joint ventures 
    with affiliates                                                31,085
  Proceeds from sale of real estate                            23,300,000
  Payment of selling costs                                       (451,499)
                                                           ---------------
  Net cash provided by investing
    activities                                                 22,879,586
                                                           ---------------
Financing activities:
  Distribution to Limited Partners               (576,398)    (13,479,611)
  Repayment of mortgage note payable                          (11,458,759)
    Principal payments on mortgage note
    payable                                                       (36,575)
                                           --------------- ---------------
  Net cash used in financing activities          (576,398)    (24,974,945)
                                           --------------- ---------------

Net change in cash and cash equivalents          (613,287)     (3,016,113)
Cash and cash equivalents at 
  beginning of period                           2,508,464      16,372,728
                                           --------------- ---------------
Cash and cash equivalents at end of period $    1,895,177  $   13,356,615
                                           =============== ===============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Accounting Policies:

(a) For financial statement purposes, the capital accounts of the General
Partner and Limited Partners have been adjusted to appropriately reflect their
remaining economic interests as provided for in the Partnership Agreement.

(b) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the quarter
ended March 31, 1998, and all such adjustments are of a normal and recurring
nature.

2. Partnership Termination:

The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property, the
Templeton Park Apartments. In addition, during 1997, the North Hill Apartments,
in which the Partnership held a minority joint venture interest, was sold.  The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements.  In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.

3. Interest Expense:

During the quarter ended March 31, 1997 the Partnership incurred and paid
interest expense on mortgage notes payable of $99,717.

4. Transactions with Affiliates:

Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1998 are:

                                       Paid       Payable
                                    ------------  ---------         

   Reimbursement of expenses to
     the General Partner, at cost $   6,169       $ 38,355
<PAGE>
5. Contingencies: 

The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain state securities and common law violations
with regard to the property acquisition process of the Partnership, and to the
adequacy and accuracy of disclosures of information concerning, as well as the
marketing efforts related to the offering of the Limited Partnership Interests
of the Partnership. The defendants continue to vigorously contest these
actions. A plaintiff class has not yet been certified in either action and, no
determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position, operations or liquidity of
the Partnership. The Partnership believes that it has meritorious defenses to
contest the claims.
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

Balcor Realty Investors 85 - Series I A Real Estate Limited Partnership (the
"Partnership") was formed in 1983 to invest in and operate income-producing
real property. The Partnership raised $82,697,000 through the sale of Limited
Partnership Interests and utilized these proceeds to acquire ten real property
investments and minority joint venture interests in three additional
properties. As of March 31, 1998, the Partnership has no properties in its
portfolio. 

Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1997 for a more complete understanding of
the Partnership's financial position.

Operations
----------

Summary of Operations
---------------------

Administrative expenses were higher than interest earned on short-term
investments during the quarter ended March 31, 1998. This was the primary
reason, the Partnership recognized a net loss for the quarter ended March 31,
1998. During 1997, the Partnership recognized a gain on the sale of the
Templeton Park Apartments which was the reason the Partnership recognized net
income for the quarter ended March 31, 1997. Further discussion of the
Partnership's operations is summarized below.

1997 Compared to 1996
---------------------
 
Discussions of fluctuations between 1998 and 1997 refer to the quarters ended
March 31, 1998 and 1997.

During 1997, the Partnership sold the Templeton Park Apartments and recognized
a gain of $12,768,729 in connection with the sale of the property. As a result
of the sale of the property, rental and service income, interest expense on
mortgage note payable, depreciation, real estate taxes and property management
fees ceased in 1997. 

Higher average cash balances were available for investment during 1997 due to
proceeds received in connection with the 1996 and 1997 property sales prior to
distribution to Limited Partners in January and April 1997. As a result,
interest income on short-term investments decreased during 1998 as compared to
1997.

The Partnership paid a fee of $1,025,000 to the holder of the first mortgage
loan in connection with the sale of the Templeton Park Apartments during 
<PAGE>
February 1997. This amount was recorded as lender participation and represents
additional interest. This amount was calculated as a percentage of the sale
price in excess of an amount specified in the loan agreement.

Property operating expenses decreased during 1998 as compared to 1997 due to
the sale of the Templeton Park Apartments. During 1998, the Partnership paid
its share of additional expenditures related to the North Hill Apartments
in which the Partnership held a minority joint venture interest. This 
property was sold in September 1997. 

During 1997, the Partnership recognized a participation in loss of joint 
venture with affiliate related to the North Hill Apartments. The property was
sold in September 1997. 

Lower portfolio management, professional and accounting fees during 1998 were
the primary reasons for the decrease in administrative expenses during 1998 as
compared to 1997.

Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership decreased by approximately $613,000 as of
March 31, 1998 as compared to December 31, 1997, primarily due to a
distribution paid to Limited Partners during January 1998 from remaining
available Net Cash Receipts reserves and from the Partnership's share of the
sale holdback on the North Hill Apartments. The Partnership used cash of
approximately $37,000 from operating activities to pay administrative expenses
and property operating expenses related to a sold property, which were
partially offset by interest income earned on short-term investments. The
Partnership used cash in its financing activities of approximately $576,000 to
pay a distribution to Limited Partners.
       
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property, the
Templeton Park Apartments. In addition, during 1997, the North Hill Apartments,
in which the Partnership held a minority joint venture interest, was sold. The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements.  In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.

To date, the Limited Partners have received cash distributions totaling $587.47
per $1,000 Interest as well as certain tax benefits. Of this amount, $98.79
represents Net Cash Receipts and $488.68 has been from Net Cash Proceeds. No
additional distributions are anticipated to be made prior to the termination of
the Partnership.  However, after paying final partnership expenses, any
remaining cash reserves will be distributed. Limited Partners will not recover
all of their original investment.  
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                          PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------

(a) Exhibits:

(4) The Subscription Agreement as set forth as Exhibit 4.1 to Amendment No. 1
to Registrant's Registration Statement on Form S-11 dated November 29, 1984
(Registration No. 2-92777) and Form of Confirmation regarding Interests in the
Partnership as set forth as Exhibit 4.2 to the Partnership's Report on Form
10-Q for the quarter ended June 30, 1995 are incorporated herein by reference.

(10) Material Contracts:

(a)(i) Agreement of Sale and attachments thereto relating to the sale of
Forestwood Apartments, East Baton Rouge Parish, Louisiana, previously filed as
Exhibit (2) to the Registrant's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Forestwood Apartments, East Baton Rouge, Louisiana previously filed as
Exhibit (10)(a)(ii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, is incorporated herein by reference.

(iii) Second Amendment to Agreement of Sale relating to the sale of Forestwood
Apartments, East Baton Rouge, Louisiana previously filed as Exhibit
(10)(a)(iii) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.

(b)(i) Agreement of Sale and attachments thereto relating to Forest Ridge
Apartments, Phase I, Arlington, Texas previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated April 23, 1996, is incorporated
herein by reference.

(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(a) to the Registrant's Current Report on Form 8-K dated June 28, 1996, is
incorporated herein by reference.

(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(b) to the Registrant's Current Report on Form 8-K dated June 28, 1996, is
incorporated herein by reference.

(c)(i) Agreement of Sale and attachment thereto relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(i) to the Registrant's Current Report on Form 8-K dated August 8, 1996,
is incorporated herein by reference.
<PAGE>
(ii) Letter dated August 19, 1996 relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(ii) to the Registrant's Current Report on Form 8-K dated August 8, 1996,
is incorporated herein by reference.

(iii) Amendment to Agreement of Sale relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(i) to the Registrant's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(iv) Second Amendment of Agreement of Sale relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(ii) to the Registrant's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(d)(i) Agreement of Sale and attachment thereto relating to the sale of
Timberlake Apartments, Phase I, Altamonte Springs, Florida, previously filed as
Exhibit (2)(b) to the Registrant's Current Report on Form 8-K dated August 8,
1996, is incorporated herein by reference.

(ii) Letter Agreement relating to the sale of Timberlake Apartments, Phase I,
Altamonte Springs, Florida, previously filed as Exhibit (99)(c) to the
Registrant's Current Report on Form 8-K dated October 14, 1996, is incorporated
herein by reference.

(e)(i) Agreement of Sale and Attachments thereto relating to the sale of
Templeton Park Apartments, Colorado Springs, Colorado, previously filed as
Exhibit (2) to the Registrant's Current Report on Form 8-K dated August 26,
1996, is incorporated herein by reference.

(ii) Letter agreements relating to the sale of the Templeton Park Apartments,
Colorado Springs, Colorado, previously filed as Exhibit (99)(a) to the
Partnership's Current Report on Form 8-K dated October 14, 1996, is
incorporated herein by reference.

(iii) Letter agreement and Notice of Disapproval dated October 25, 1996,
regarding the sale of Templeton Park Apartments, Colorado Springs, Colorado
previously filed as Exhibit (10)(e)(iii) to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein
by reference.

(iv) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Templeton Park Apartments, Colorado Springs, Colorado previously filed
as Exhibit (10)(e)(iv) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, is incorporated herein by reference.

(v)  Letter Agreements dated November 21, 1996, December 6, 1996, December 11,
1996, December 13, 1996, December 20, 1996, and January 20, 1997, relating to
the sale of the Templeton Park Apartments, Colorado Springs, Colorado,
previously filed as Exhibit (99)(i) to the Registrant's Quarterly Report on
Form 8-K dated February 21, 1997, is incorporated herein by reference.

(vi) Second Amendment to Agreement of Sale and Escrow Agreement dated January
3, 1997, relating to the sale of the Templeton Park Apartments, Colorado 
<PAGE>
Springs, Colorado, previously filed as Exhibit (99)(ii) to the Registrant's
Current Report on Form 8-K dated February 21, 1997, is incorporated herein by
reference.

(f)(i) Agreement of Sale entered into May 22, 1997 relating to the sale of
North Hill Apartments previously filed as Exhibit (2) to the Registrant's
Current Report on Form 8-K dated May 22, 1997, is incorporated herein by
reference.

(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(ix) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, is incorporated herein by reference.

(iii) Second Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the North Hill Apartments, De Kalb County, Georgia, previously
filed as Exhibit (10)(f)(x) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997, is incorporated herein by reference.

(iv) Third Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(xi) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, is incorporated herein by reference.

(v) Fourth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(xii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, is incorporated herein by reference.

(vi) Fifth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(xiii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, is incorporated herein by reference.

(vii) Sixth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(xiv) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, is incorporated herein by reference.

(viii) Letter Agreement dated June 30, 1997, relating to the sale of the North
Hill Apartments, De Kalb County, Georgia, previously filed as Exhibit
(10)(f)(xv) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, is incorporated herein by reference.

(ix) Seventh Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the North Hill Apartments, De Kalb County, Georgia, previously
filed as Exhibit (10)(f)(xvi) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997, is incorporated herein by reference.

(x) Eighth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, previously filed as
Exhibit (10)(f)(x) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, is incorporated herein by reference.
<PAGE>
(27) Financial Data Schedule of the Partnership for the three months ended  
March 31, 1998 is attached hereto.

(b) Reports on Form 8-K: No Reports on Forn 8-K were filed during the quarter
ended March 31, 1998.
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                        BALCOR REALTY INVESTORS 85-SERIES I
                        A REAL ESTATE LIMITED PARTNERSHIP

                        By:/s/Thomas E. Meador                           
                              --------------------------------
                              Thomas E. Meador
                              President and Chief Executive Officer (Principal
                              Executive Officer) of Balcor Partners-XVI, the 
                              General Partner

                        By:/s/Jayne A. Kosik                           
                              --------------------------------
                              Jayne A. Kosik
                              Senior Managing Director and Chief Financial 
                              Officer (Principal Accounting Officer) of Balcor
                              Partners-XVI, the General Partner


Date:  May 11, 1998             
      -------------------------
<PAGE>