UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934

For the period ended March 31, 1998

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]

For the transition period from                 to
                              -----------------  ------------------

Commission File Number 0-13479
                       -------

                              PS PARTNERS III, LTD.
             -------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          California                                       95-3920904
----------------------------------                   ----------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                       Identification Number)


      701 Western Avenue
     Glendale, California                                 91201-2394
----------------------------------                   ----------------------
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:  (818) 244-8080
                                                     --------------



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>


                                      INDEX


PART I.   FINANCIAL INFORMATION

    Condensed consolidated balance sheets at March 31, 1998
         and December 31, 1997                                               2

    Condensed consolidated statements of income for the three
         months ended March 31, 1998 and 1997                                3

    Condensed consolidated statements of cash flows for the three
         months ended March 31, 1998 and 1997                              4-5

    Notes to condensed consolidated financial statements                     6

    Management's discussion and analysis of financial condition
         and results of operations                                         7-8

PART II.  OTHER INFORMATION

    (Items 1 through 5 are not applicable)

    Item 6 - Exhibits and Reports on Form 8-K                                9


<PAGE>

                              PS PARTNERS III, LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                     March 31,        December 31,
                                                                                       1998               1997
                                                                                ------------------------------------
                                                                                    (Unaudited)

                                          ASSETS


<S>                                                                                   <C>                <C>        
Cash and cash equivalents                                                             $ 1,876,000        $ 1,455,000

Rent and other receivables                                                                191,000            244,000

Real estate facilities, at cost:
   Land                                                                                13,856,000         13,856,000
   Buildings and equipment                                                             69,102,000         68,931,000
                                                                                ------------------------------------
                                                                                       82,958,000         82,787,000

   Less accumulated depreciation                                                      (35,921,000)       (35,058,000)
                                                                                ------------------------------------
                                                                                       47,037,000         47,729,000

Investment in real estate entity                                                        5,593,000          5,608,000

Other assets                                                                              151,000            144,000
                                                                                ------------------------------------

                                                                                     $ 54,848,000       $ 55,180,000
                                                                                ====================================


                       LIABILITIES AND PARTNERS' EQUITY


Accounts payable                                                                        $ 706,000          $ 932,000

Advance payments from renters                                                             514,000            476,000

Minority interest in general partnerships                                              28,136,000         28,192,000

Partners' equity:
   Limited partners' equity, $500 per unit, 128,000
      units authorized, issued and outstanding                                         25,153,000         25,240,000
   General partner's equity                                                               339,000            340,000
                                                                                ------------------------------------

Total partners' equity                                                                 25,492,000         25,580,000
                                                                                ------------------------------------

                                                                                     $ 54,848,000       $ 55,180,000
                                                                                ====================================
</TABLE>
                            See accompanying notes.
                                       2

<PAGE>

                              PS PARTNERS III, LTD.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                         Three Months Ended
                                                                                              March 31,
                                                                               ------------------------------------
                                                                                        1998              1997
                                                                               ------------------------------------

REVENUE:

<S>                                                                                  <C>                <C>        
Rental income                                                                        $ 3,846,000        $ 3,706,000
Equity in income of real estate entity                                                   103,000             73,000
Interest income                                                                           20,000              6,000
                                                                               ------------------------------------
                                                                                       3,969,000          3,785,000
                                                                               ------------------------------------

COSTS AND EXPENSES:

Cost of operations                                                                     1,273,000          1,307,000
Management fees                                                                          231,000            222,000
Depreciation and amortization                                                            863,000            814,000
Administrative                                                                            22,000             21,000
                                                                               ------------------------------------
                                                                                       2,389,000          2,364,000
                                                                               ------------------------------------

Income before minority interest                                                        1,580,000          1,421,000

Minority interest in income                                                             (668,000)          (658,000)
                                                                               ------------------------------------

NET INCOME                                                                             $ 912,000          $ 763,000
                                                                               ====================================

Limited partners' share of net income
   ($6.28 per unit in 1998 and
   $5.13 per unit in 1997)                                                             $ 804,000          $ 656,000
General partner's share of net income                                                    108,000            107,000
                                                                               ------------------------------------
                                                                                       $ 912,000          $ 763,000
                                                                               ====================================
</TABLE>
                            See accompanying notes.
                                       3

<PAGE>

                              PS PARTNERS III, LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                                          March 31,
                                                                          ---------------------------------------
                                                                                    1998                1997
                                                                          ---------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

   <S>                                                                             <C>                 <C>      
   Net income                                                                      $ 912,000           $ 763,000

   Adjustments to reconcile net income to net cash
       provided by operating activities

       Depreciation and amortization                                                 863,000             814,000
       Decrease in rent and other receivables                                         53,000              34,000
       (Increase) decrease in other assets                                            (7,000)            112,000
       Decrease in accounts payable                                                 (226,000)           (320,000)
       Increase in advance payments from renters                                      38,000              16,000
       Equity income in real estate entity                                          (103,000)            (73,000)
       Minority interest in income                                                   668,000             658,000
                                                                          ---------------------------------------

         Total adjustments                                                         1,286,000           1,241,000
                                                                          ---------------------------------------

         Net cash provided by operating activities                                 2,198,000           2,004,000
                                                                          ---------------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES:

   Distributions from real estate entity                                             118,000                   -
   Investment in real estate entity                                                        -             (11,000)
   Additions to real estate facilities                                              (171,000)           (404,000)
                                                                          ---------------------------------------

         Net cash used in investing activities                                       (53,000)           (415,000)
                                                                          ---------------------------------------

CASH FLOWS USED IN FINANCING ACTIVITIES:

   Distributions to holder of minority interest                                     (724,000)           (586,000)
   Distributions to partners                                                      (1,000,000)         (1,000,000)
                                                                          ---------------------------------------

         Net cash used in financing activities                                    (1,724,000)         (1,586,000)
                                                                          ---------------------------------------

Net increase in cash and cash equivalents                                            421,000               3,000

Cash and cash equivalents at the beginning of the period                           1,455,000             529,000
                                                                          ---------------------------------------

Cash and cash equivalents at the end of the period                               $ 1,876,000           $ 532,000
                                                                          =======================================
</TABLE>
                            See accompanying notes.
                                       4

<PAGE>

                              PS PARTNERS III, LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                          March 31,
                                                                             ------------------------------------
                                                                                   1998              1997
                                                                             ------------------------------------


Supplemental schedule of noncash investing and financing activities:


   <S>                                                                             <C>         <C>          
   Investment in real estate entity                                                $ -         $ (5,399,000)

   Transfer of real estate facilities for interest in real 
    estate entity, net                                                               -            5,399,000 

</TABLE>
                            See accompanying notes.
                                       5



<PAGE>

                              PS PARTNERS III, LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998
                                   (UNAUDITED)


1.     The accompanying  unaudited condensed  consolidated  financial statements
       have  been  prepared  pursuant  to  the  rules  and  regulations  of  the
       Securities  and Exchange  Commission.  Certain  information  and footnote
       disclosures   normally  included  in  financial  statements  prepared  in
       accordance  with  generally  accepted  accounting  principles  have  been
       condensed  or omitted  pursuant to such rules and  regulations,  although
       management believes that the disclosures contained herein are adequate to
       make the information presented not misleading.  These unaudited condensed
       consolidated  financial statements should be read in conjunction with the
       financial  statements  and related notes  appearing in the  Partnership's
       Form 10-K for the year ended December 31, 1997.

2.     In the  opinion  of  management,  the  accompanying  unaudited  condensed
       consolidated financial statements reflect all adjustments,  consisting of
       only  normal  accruals,  necessary  to present  fairly the  Partnership's
       financial  position at March 31, 1998,  the results of operations for the
       three  months  ended March 31, 1998 and 1997 and cash flows for the three
       months then ended.

3.     The results of  operations  for the three months ended March 31, 1998 are
       not  necessarily  indicative  of the results to be expected  for the full
       year.

4.     In January 1997, the Partnership  and PSI and other related  partnerships
       transferred  a total  of 35  business  parks  to PS  Business  Parks,  LP
       ("PSBPLP"),  an operating  partnership formed to own and operate business
       parks  in  which  PSI has a  significant  interest.  Included  among  the
       properties  transferred was the  Partnership's  business park in exchange
       for a partnership interest in PSBPLP. The general partner of PSBPLP is PS
       Business Parks, Inc.


                                       6
<PAGE>

                              PS PARTNERS III, LTD.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations:
----------------------

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997:

       The  Partnership's  net income for the three  months ended March 31, 1998
was  $912,000  compared to $763,000  for the three  months ended March 31, 1997,
representing an increase of $149,000,  or 20%. The increase was primarily due to
an increase in property operations at the Partnership's real estate facilities.

       Rental  income  for  the  Partnership's   mini-warehouse  operations  was
$3,846,000  compared to $3,706,000 for the three months ended March 31, 1998 and
1997, respectively, representing an increase of $140,000, or 4%. The increase in
rental income was primarily  attributable to increased rental rates. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.59
compared  to  $.57  for  the  three  months  ended  March  31,  1998  and  1997,
respectively.  The  weighted  average  occupancy  levels  at the  mini-warehouse
facilities  remained stable at 89% for the three months ended March 31, 1997 and
1998. Cost of operations  (including  management fees) decreased $25,000, or 2%,
to  $1,504,000  from  $1,529,000  for the three  months ended March 31, 1998 and
1997,   respectively.   Accordingly,   for  the   Partnership's   mini-warehouse
operations,  property net operating  income  increased by $165,000,  or 8%, from
$2,177,000  to  $2,342,000  for the three  months ended March 31, 1997 and 1998,
respectively.

       Depreciation and amortization  increased $49,000, or 6%, from $814,000 to
$863,000 for the three months ended March 31, 1997 and 1998, respectively.  This
increase was primarily  attributable to the depreciation of capital expenditures
made during 1997 and 1998.

       Minority  interest in income was $668,000 in 1998 compared to $658,000 in
1997,  representing  an increase of $10,000,  or 2%. This increase was primarily
attributable  to an  increase in  operations  at the  Partnership's  real estate
facilities  owned  jointly  with  PSI,  partially  offset  by an  allocation  of
depreciation and  amortization  expense  (pursuant to the partnership  agreement
with respect to those real estate  facilities  which are jointly owned with PSI)
to PSI of  $176,000  for the three  months  ended  March 31,  1998  compared  to
$122,000 for the same period in 1997.

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

         The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term  basis,  primarily from internally  generated


                                       7
<PAGE>


cash from property operations and cash reserves.  Cash generated from operations
($2,198,000  for the three months ended March 31, 1998) has been  sufficient  to
meet all current obligations of the Partnership.

       During 1998,  the  Partnership  anticipates  approximately  $1,227,000 of
capital  improvements (of which $379,000  represents PSI's joint venture share).
Total  capital  improvements  were $171,000 for the three months ended March 31,
1998 of which $124,000 represents the Partnership's share.

       The Partnership  paid  distributions  to the limited and general partners
totaling $891,000 ($6.96 per unit) and $109,000, respectively,  during the first
three months of 1998. Future  distribution rates may be adjusted to levels which
are supported by operating  cash flow after capital  improvements  and any other
necessary obligations.


                                       8
<PAGE>

                           PART II. OTHER INFORMATION

ITEMS 1 through 5 are not applicable.

Item 6   Exhibits and Reports on Form 8-K

         (a)      The following Exhibits are included herein:

                  (27)     Financial Data Schedule

         (b)      Reports on Form 8-K

                  None.

                                   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.


                               DATED: May 13, 1998
                                      PS PARTNERS III, LTD.
                               BY:    Public Storage, Inc.
                                      General Partner

                               BY:    /s/ John Reyes
                                      -----------------------------------------

                                      Senior Vice President and Chief Financial
                                        Officer of Public Storage, Inc.
                                        (principal financial and accounting
                                        officer)


                                       9