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 September 30, 1995
                               ------------------
                                      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 (708) 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
                   September 30, 1995 and December 31, 1994
                                  (Unaudited)

                                    ASSETS
                                                1995           1994
                                           ------------- --------------
Cash and cash equivalents                  $  3,699,291  $   6,475,393
Accounts and accrued interest receivable         17,226         28,827
Other assets - principally escrow deposits    1,739,049      1,140,420
Prepaid expenses                                270,114
Deferred expenses, net of accumulated
  amortization of $327,165 in 1995 
  and $213,273 in 1994                        1,069,228        973,153
                                           ------------- --------------
                                              6,794,908      8,617,793
                                           ------------- --------------
Investment in real estate, at cost:
  Land                                       12,380,326     12,380,326
  Buildings and improvements                 65,940,832     65,940,832
                                           ------------- --------------
                                             78,321,158     78,321,158
  Less accumulated depreciation              28,470,834     27,027,028
                                           ------------- --------------
Investment in real estate, net of
  accumulated depreciation                   49,850,324     51,294,130
                                           ------------- --------------
                                           $ 56,645,232  $  59,911,923
                                           ============= ==============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                           $    156,145  $     133,743
Due to affiliates                                25,092         75,413
Accrued liabilities, principally 
  real estate taxes                             700,503        366,628
Security deposits                               264,055        288,084
Losses in excess of investments in joint
   ventures with affiliates                     366,655        553,742
Mortgage notes payable                       56,660,609     57,381,930
                                           ------------- --------------
     Total liabilities                       58,173,059     58,799,540

Partners' (deficit) capital (82,697
  Limited Partnership Interests issued
  and outstanding)                           (1,527,827)     1,112,383
                                           ------------- --------------
                                           $ 56,645,232  $  59,911,923
                                           ============= ==============


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 nine months ended September 30, 1995 and 1994
                                  (Unaudited)

                                                1995           1994
                                           ------------- --------------
Income:
  Rental and service                       $ 11,511,463  $  11,181,947
  Interest on short-term investments            284,757        143,758
  Participation in income (losses) of joint 
     ventures with affiliates                   711,278       (261,696)
                                           ------------- --------------
    Total income                             12,507,498     11,064,009
                                           ------------- --------------

Expenses:
  Interest on mortgage notes payable          3,632,583      3,717,168
  Depreciation                                1,443,806      1,443,806
  Amortization of deferred expenses             113,892        120,280
  Property operating                          3,716,683      3,730,718
  Real estate taxes                             752,918        727,330
  Property management fees                      568,637        555,102
  Administrative                                412,652        402,454
                                           ------------- --------------
    Total expenses                           10,641,171     10,696,858
                                           ------------- --------------
Income before extraordinary item              1,866,327        367,151
Extraordinary item:
  Gain on forgiveness of debt                    41,798
                                           ------------- --------------
Net income                                 $  1,908,125  $     367,151
                                           ============= ==============
Income before extraordinary item 
  allocated to General Partner             $     18,663  $       3,672
                                           ============= ==============
Income before extraordinary item 
  allocated to Limited Partners            $  1,847,664  $     363,479
                                           ============= ==============
Income before extraordinary item 
  per Limited Partnership Interest
  (82,697 issued and outstanding)          $      22.34  $        4.40
                                           ============= ==============
Extraordinary item allocated to
  General Partner                          $        418           None
                                           ============= ==============
Extraordinary item allocated to
  Limited Partners                         $     41,380           None
                                           ============= ==============
Extraordinary item per Limited
  Partnership Interest
  (82,697 issued and outstanding)          $       0.50           None
                                           ============= ==============
Net income allocated to General Partner    $     19,081  $       3,672
<PAGE>
                                           ============= ==============
Net income allocated to Limited Partners   $  1,889,044  $     363,479
                                           ============= ==============
Net income per Limited Partnership 
  Interest (82,697 issued and outstanding) $      22.84  $        4.40
                                           ============= ==============
Distributions to Limited Partners          $  4,548,335           None
                                           ============= ==============
Distributions per Limited 
  Partnership Interest                     $      55.00           None
                                           ============= ==============






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 September 30, 1995 and 1994
                                  (Unaudited)

                                                1995           1994
                                           ------------- --------------
Income:
  Rental and service                       $  3,885,192  $   3,849,277
  Interest on short-term investments             76,981         70,121
                                           ------------- --------------
    Total income                              3,962,173      3,919,398
                                           ------------- --------------

Expenses:
  Interest on mortgage notes payable          1,143,245      1,296,951
  Depreciation                                  481,267        481,267
  Amortization of deferred expenses              41,645         53,657
  Property operating                          1,557,467      1,433,705
  Real estate taxes                             251,058        244,332
  Property management fees                      196,216        189,979
  Administrative                                141,216         92,898
  Participation in losses of joint 
     ventures with affiliates                    22,283        114,991
                                           ------------- --------------
    Total expenses                            3,834,397      3,907,780
                                           ------------- --------------
Net income                                 $    127,776  $      11,618
                                           ============= ==============
Net income allocated to General Partner    $      1,278  $         116
                                           ============= ==============
Net income allocated to Limited Partners   $    126,498  $      11,502
                                           ============= ==============
Net income per Limited Partnership
  Interest (82,697 issued and outstanding) $       1.53  $        0.14
                                           ============= ==============
Distribution to Limited Partners           $  3,721,365           None
                                           ============= ==============
Distribution per Limited 
  Partnership Interest                     $      45.00           None
                                           ============= ==============









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 nine months ended September 30, 1995 and 1994
                                  (Unaudited)

                                                1995           1994
                                           ------------- --------------
Operating activities:
  Net income                               $  1,908,125  $     367,151
  Adjustments to reconcile net income 
    to net cash provided by 
    operating activities:
      Gain on forgiveness of debt               (41,798)
      Participation in income (losses)
        of joint ventures with affiliates      (711,278)       261,696
      Depreciation of properties              1,443,806      1,443,806
      Amortization of deferred expenses         113,892        120,280
      Net change in:
      Accounts and accrued 
        interest receivable                      11,601        404,972
      Other assets                             (319,307)      (289,727)
      Prepaid expenses                         (270,114)
      Accounts payable                           22,402         63,412
      Due to affiliates                         (50,321)        74,858
      Accrued liabilities                       333,875        304,131
      Security deposits                         (24,029)        (5,140)
                                           ------------- --------------
  Net cash provided by operating activities   2,416,854      2,745,439
                                           ------------- --------------

Investing activities:
  Capital contributions to joint
    ventures with affiliates                    (25,323)       (10,372)
  Distributions from joint ventures 
    with affiliates                             549,514        109,456
                                           ------------- --------------
  Net cash provided by investing activities     524,191         99,084
                                           ------------- --------------
Financing activities:
  Distributions to Limited Partners          (4,548,335)
  Repayment of mortgage note payable         (7,786,649)   (10,563,000)
  Proceeds from issuance of mortgage
    notes payable                             8,140,000     12,890,000
  Principal payments on mortgage 
    notes payable                            (1,032,874)      (687,008)
  Disbursements from improvement escrows         89,678
  Payment of deferred expenses                 (209,967)      (396,202)
  Funding of improvement escrows               (369,000)      (547,760)
                                           ------------- --------------
  Net cash used in or provided
    by financing activities                  (5,717,147)       696,030
                                           ------------- --------------
Net change in cash and cash equivalents      (2,776,102)     3,540,553
Cash and cash equivalents at beginning
  of period                                   6,475,393      3,129,791
                                           ------------- --------------

Cash and cash equivalents at end of period $  3,699,291  $   6,670,344
                                           ============= ==============

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:

In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1995, and all such adjustments are of a normal and
recurring nature.

2. Interest Expense:

During the nine months ended September 30, 1995 and 1994, the Partnership
incurred and paid interest expense on mortgage notes payable to unaffiliated
parties of $3,632,583 and $3,717,168. 

3. Transactions with Affiliates:

Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1995 are:

                                             Paid          
                                    -----------------------
                                    Nine Months   Quarter    Payable
                                    ------------  ---------  --------
   Reimbursement of expenses to
     the General Partner, at cost       $182,359    $25,299   $25,092
      
       
                                               
4. Investment in Joint Venture With Affiliate:

Pinebrook Apartments was acquired by a joint venture consisting of the
Partnership and an affiliate. The Partnership and the affiliate hold
participating percentages in the joint venture of 48.43% and 51.57%,
respectively. In February 1995, the joint venture sold the property for a sale
price of $6,140,000. From the proceeds of the sale, $5,058,226 was paid to
third party mortgage holders in satisfaction of the first, second and fourth
mortgage loans, as well as a brokerage commission and other closing costs. The
joint venture recognized a gain of $1,814,970 from the sale of this property,
of which $780,279 was the Partnership's share. Total proceeds received from the
sale of this property were $871,599, of which $422,115 was the Partnership's
share.  The Partnership's share of the gain is included in "Participation in
income of joint ventures with affiliates" and is partially offset by the
Partnership's share of operating losses through the sale date.

5. Refinancing: 

In May 1995, the Boulder Springs Apartments mortgage loan was refinanced.  The
interest rate decreased from 12.875% to 7.59%, the maturity date was extended
from June 1995 to June 2002, and the monthly payment decreased from $90,457 to
$57,419.  A portion of the proceeds from the new $8,140,000 first mortgage loan
was used to repay the existing first mortgage loan balance of $7,786,649.
<PAGE>
6. Subsequent Event:

In October 1995, the Partnership made a distribution of $1,860,683 ($22.50 per
Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Net Cash Receipts of $7.50 per Interest for
the third quarter of 1995, a special distribution of $6.00 per Interest from
Net Cash Receipts reserves, and a special distribution of $9.00 per Interest
from Net Cash Proceeds reserves.
<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. During 1995, the Partnership sold one of
its minority joint venture interests, and, in prior years, sold two of the
properties and relinquished one of the properties through foreclosure. The
Partnership continues to operate the remaining seven real property
investments and two minority joint venture interests.

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
1994 for a more complete understanding of the Partnership's financial
position.

Operations
----------

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

The Pinebrook Apartments, which was owned by a joint venture consisting of
the Partnership and an affiliate, was sold in February 1995. The
Partnership recognized its share of the gain on sale which is the primary
reason the Partnership generated higher net income in 1995 as compared to
1994. In addition, the Partnership had improved operations at certain of
the Partnership's properties. Further discussion of the Partnership's
operations is summarized below.

1995 Compared to 1994
---------------------
      
Unless otherwise noted, discussions of fluctuations between 1995 and 1994
refer to both the quarter and nine months ended September 30, 1995 and
1994.

Interest income on short-term investments increased in 1995 as compared to
1994 due to higher average cash balances and an increase in interest rates
earned on short-term investments.

Interest on mortgage notes payable decreased for the quarter ended
September 30, 1995 when compared to the same period in 1994 due to the May
1995 refinancing of the Boulder Springs Apartments mortgage loan.

Due to increased third party professional fees, administrative expenses
increased during the quarter ended September 30, 1995 when compared to the
same period in 1994. 

Pinebrook Apartments, in which the Partnership held a minority joint
venture interest, was sold during February 1995. As a result of the gain
<PAGE>
recognized in connection with the sale, the Partnership recognized income
from participation in joint ventures with affiliates during the nine months
ended September 30, 1995 as compared to a loss during the same period in
1994.  In addition, the Partnership recognized a smaller loss from
participation in joint ventures with affiliates for the quarter ended
September 30, 1995 as compared to the same period in 1994 due to the sale
of Pinebrook Apartments which had been operating at a loss. 

During 1995, the Partnership recognized an extraordinary gain on
forgiveness of debt of $41,798 in connection with a settlement reached with
the seller of the Templeton Park Apartments.

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

The cash position of the Partnership decreased as of September 30, 1995
when compared to December 31, 1994, primarily due to a special distribution
paid to the Limited Partners in July 1995.  

The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A
deficit is considered to be significant if it exceeds $250,000 annually or
20% of the property's rental and service income. The Partnership defines
cash flow generated from its properties as an amount equal to the
property's revenue receipts less property related expenditures, which
include debt service payments. During 1995 and 1994, all seven of the
Partnership's remaining properties generated positive cash flow. Of the
remaining two properties in which the Partnership holds minority joint
venture interests, North Hill Apartments generated positive cash flow while
Seabrook Apartments generated a marginal cash flow deficit during the nine
months ended September 30, 1995 and 1994.  Pinebrook Apartments, in which
the Partnership held a minority joint venture interest, was sold in
February 1995 and generated a marginal cash flow deficit in both 1995 and
1994.

While the cash flow of certain of the Partnership's properties has
improved, the General Partner continues to pursue a number of actions aimed
at improving the cash flow of the Partnership's properties including
improving operating performance and seeking rent increases where market
conditions allow. As of September 30, 1995, the occupancy rates of the
Partnership's properties ranged from 95% to 99%. Despite improvements
during 1994 and 1995 in the local economies and rental markets where
certain of the Partnership's properties are located, the General Partner
believes that continued ownership of many of the properties is in the best
interest of the Partnership in order to maximize potential returns to
Limited Partners. As a result, the Partnership will continue to own these
properties for longer than the holding period for the assets originally
described in the prospectus.

Each of the Partnership's properties is owned through the use of
third-party mortgage loan financing and, therefore, the Partnership is
subject to the financial obligations required by such loans.  As a result
of the General Partner's successful efforts to obtain loan modifications,
as well as refinancings of many existing loans with new lenders, the
Partnership has no third party financing which matures prior to 1997.

In May 1995, the Boulder Springs mortgage loan was refinanced.  Proceeds
from the new loan of $8,140,000 were used to pay the existing loan of
<PAGE>
$7,786,649.  See Note 5 of Notes to the Financial Statements for additional
information.

The Pinebrook Apartments was owned by a joint venture consisting of the
Partnership and an affiliate. In February 1995, the joint venture sold the
property in a cash sale for $6,140,000. From the proceeds, $5,058,226 was
paid to the third party mortgage holders in satisfaction of the first,
second and fourth mortgage loans. Additionally, $716,729 was paid in
satisfaction of the third mortgage note payable to Pinebrook Limited
Partnership, a separate joint venture consisting of the Partnership and the
affiliate. Total proceeds received from this transaction were $871,599, of
which $422,115 was the Partnership's share. See Note 4 of Notes to the
Financial Statements for additional information.

In October 1995, the Partnership made a distribution of $1,860,683 ($22.50
per Interest) to the holders of Limited Partnership Interests representing
a regular quarterly distribution of Net Cash Receipts of $7.50 per Interest
for the  third quarter of 1995, a special distribution of $6.00 per
Interest from Net Cash Receipts reserves, and a special distribution of
$9.00 per Interest from Net Cash Proceeds reserves.  The quarterly
distribution level increased compared to the second quarter of 1995 due to
improved operations at the Partnership's properties.  Including the October
1995 distribution, Limited Partners have received cumulative cash
distributions of $82.50 per $1,000 Interest as well as certain tax
benefits.  Of this amount, $53.50 has been from Net Cash Receipts and
$29.00 has been from Net Cash Proceeds. The General Partner expects to
continue quarterly distributions to Limited Partners. However, the level of
future distributions, if available, will depend on cash flow from the
Partnership's remaining properties and proceeds from future property sales,
as to both of which there can be no assurances.

Inflation has several types of potentially conflicting impacts on real
estate investments. Short-term inflation can increase real estate operating
costs which may or may not be recovered through increased rents and/or
sales prices, depending on general or local economic conditions. In the
long-term, inflation can be expected to increase operating costs and
replacement costs and may lead to increased rental revenues and real estate
values.
<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
Registrant's Report on Form 10-Q for the quarter ended June 30, 1995
(Commission File No. 0-14353) are incorporated herein by reference.

(27) Financial Data Schedule of the Registrant for the nine month period
ending September 30, 1995 is attached hereto.

(b) Reports on Form 8-K: No reports were filed on Form 8-K during the
quarter ended September 30, 1995.
<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/Brian D. Parker                          
                              --------------------------------
                              Brian D. Parker
                              Senior Vice President, and Chief Financial
                              Officer (Principal Accounting and Financial
                              Officer) of Balcor Partners-XVI, the General
                              Partner


Date: November 13, 1995              
      -------------------------
<PAGE>