UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 8-K

                                CURRENT REPORT

                      Pursuant to Section 13 or 15(d) of
                      The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):  March 5, 1996


                    Balcor/Colonial Storage Income Fund-86
              (Exact Name of Registrant as Specified in Charter)


          Illinois                  0-15639                  36-3435425
----------------------------      -----------            -------------------
(State or Other Jurisdiction      (Commission               (IRS Employer
      of incorporation)           File Number)           Identification No.)


     Balcor Plaza, 2355 Waukegan Road, Suite A200, Bannockburn, IL    60015
     -------------------------------------------------------------    -----
               (Address of Principal Executive Offices)             (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
<PAGE>
Item 2.   Acquisition or Disposition of Assets.

(a)  Pursuant to an agreement dated as of March 5, 1996, the Registrant agreed
     to sell to Storage Trust Properties, L.P., a Delaware limited partnership
     (the "Purchaser") substantially all of the assets of the Registrant,
     consisting of 24 mini-warehouse facilities (the "Facilities").  The
     purchase price (the "Purchase Price") for the Facilities is $67,100,000.
     The Purchaser has paid $3,350,000 to the Registrant as earnest money to be
     held in escrow until consummation of the sale.  The remaining $63,750,000
     of the Purchase Price, plus or minus prorations and credits, if any, will
     be paid to the Purchaser at the closing, which is currently scheduled to
     occur on May 15, 1996 but may, under certain limited circumstances, be
     extended to not later than July 15, 1996 (the "Closing").  The Purchase 
     Price was the result of arm's-length negotiations between the Registrant
     and the Purchaser.

     The Registrant will pay to affiliates of its general partners (the
     "General Partners") a brokerage commission equal to 3% of the amount paid
     by the Purchaser in connection with the sale of the Facilities.

     The sale of the Facilities is subject to the satisfaction of certain terms
     and conditions, including the receipt of appropriate closing
     documentation, the Purchaser's satisfactory review of survey, title and
     environmental matters and the non-occurrence of certain events which could
     give rise to termination of the sale of the Facilities prior to the
     Closing.  In addition, consummation of the transaction is subject to
     approval by the holders of a majority of the outstanding limited
     partnership interests of the Registrant.  There can be no assurance that
     all terms and conditions will be satisfied or that the necessary consent
     will be obtained and, therefore, it is possible that the Registrant will
     not sell the Facilities.

     As soon as practicable after the Closing, the General Partners intend to
     liquidate and dissolve the Registrant and distribute the net proceeds from
     the sale of the Facilities in the manner set forth in the Registrant's
     Amended and Restated Agreement and Certificate of Limited Partnership.

     There exists no material relationship between the Registrant and the
     Purchaser, or between any affiliates of such entities.

Item 7.   Financial Statements and Exhibits.


(c)  Exhibits.

     2.1  Agreement of Sale by and between Storage Trust Properties, L.P., and
          Balcor/Colonial Storage Income Fund-86, dated as of March 5, 1996, as
          amended.
<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 hereunto duly authorized.

                                   BALCOR/COLONIAL STORAGE 
                                   INCOME FUND-86

                                   By:  Balcor Storage Partners-86, an Illinois
                                        general partnership, a General Partner


                                        By:  The Balcor Company, a Delaware
                                             corporation
                                        Its:      General Partner


                                        By:  /s/Jerry M. Ogle
                                             -------------------------------
                                        Its: Vice President and Secretary
                                             -------------------------------


                                   By:  Colonial Storage 86, Inc., a Texas
                                        corporation, a General Partner


                                        By:  /s/James R. Pruett
                                             -------------------------------
                                        Its: President
                                             -------------------------------

Dated:  March 19, 1996
<PAGE>
                  Exhibit Index
                  -------------

                                              Sequential
                                                 Page
 Exhibit #               Item                   Number
-----------   ---------------------------     ----------
   2.1        Agreement of  Sale  between         5
              Storage  Trust  Properties,
              L.P.  and   Balcor/Colonial
              Storage   Income   Fund-86,
              dated as of March 5,  1996,
              as amended.
<PAGE>
[{"type": "8-K", "sequence": "1", "description": "MAR. 19, 1996 8 - K FOR BCSIF - 86", "secsgml_size_bytes": 5832}]
{"company-data": {"conformed-name": "BALCOR COLONIAL STORAGE INCOME FUND 86", "cik": "0000795748", "assigned-sic": "4210", "irs-number": "363435425", "state-of-incorporation": "IL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-15639", "film-number": "96536266"}, "business-address": {"street1": "4381 GREEN OAKS BLVD WEST", "street2": "SUITE 100", "city": "ARLINGTON", "state": "TX", "zip": "76016", "phone": "817-561-0100"}, "mail-address": {"street1": "4381 GREEN OAKS BLVD WEST", "street2": "SUITE 100", "city": "ARLINGTON", "state": "TX", "zip": "76016"}}
UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 8-K

                                CURRENT REPORT

                      Pursuant to Section 13 or 15(d) of
                      The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):  March 5, 1996

                    Balcor/Colonial Storage Income Fund-86
              (Exact Name of Registrant as Specified in Charter)

          Illinois                  0-15639                  36-3435425
----------------------------      -----------            -------------------
(State or Other Jurisdiction      (Commission               (IRS Employer
      of incorporation)           File Number)           Identification No.)

     Balcor Plaza, 2355 Waukegan Road, Suite A200, Bannockburn, IL    60015
     -------------------------------------------------------------    -----
               (Address of Principal Executive Offices)             (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
Item 2.   Acquisition or Disposition of Assets.

(a)  Pursuant to an agreement dated as of March 5, 1996, the Registrant agreed
     to sell to Storage Trust Properties, L.P., a Delaware limited partnership
     (the "Purchaser") substantially all of the assets of the Registrant,
     consisting of 24 mini-warehouse facilities (the "Facilities").  The
     purchase price (the "Purchase Price") for the Facilities is $67,100,000.
     The Purchaser has paid $3,350,000 to the Registrant as earnest money to be
     held in escrow until consummation of the sale.  The remaining $63,750,000
     of the Purchase Price, plus or minus prorations and credits, if any, will
     be paid to the Purchaser at the closing, which is currently scheduled to
     occur on May 15, 1996 but may, under certain limited circumstances, be
     extended to not later than July 15, 1996 (the "Closing").  The Purchase 
     Price was the result of arm's-length negotiations between the Registrant
     and the Purchaser.

     The Registrant will pay to affiliates of its general partners (the
     "General Partners") a brokerage commission equal to 3% of the amount paid
     by the Purchaser in connection with the sale of the Facilities.

     The sale of the Facilities is subject to the satisfaction of certain terms
     and conditions, including the receipt of appropriate closing
     documentation, the Purchaser's satisfactory review of survey, title and
     environmental matters and the non-occurrence of certain events which could
     give rise to termination of the sale of the Facilities prior to the
     Closing.  In addition, consummation of the transaction is subject to
     approval by the holders of a majority of the outstanding limited
     partnership interests of the Registrant.  There can be no assurance that
     all terms and conditions will be satisfied or that the necessary consent
     will be obtained and, therefore, it is possible that the Registrant will
     not sell the Facilities.

     As soon as practicable after the Closing, the General Partners intend to
     liquidate and dissolve the Registrant and distribute the net proceeds from
     the sale of the Facilities in the manner set forth in the Registrant's
     Amended and Restated Agreement and Certificate of Limited Partnership.

     There exists no material relationship between the Registrant and the
     Purchaser, or between any affiliates of such entities.

Item 7.   Financial Statements and Exhibits.

(c)  Exhibits.

     2.1  Agreement of Sale by and between Storage Trust Properties, L.P., and
          Balcor/Colonial Storage Income Fund-86, dated as of March 5, 1996, as
          amended.
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 hereunto duly authorized.

                                   BALCOR/COLONIAL STORAGE 
                                   INCOME FUND-86

                                   By:  Balcor Storage Partners-86, an Illinois
                                        general partnership, a General Partner

                                        By:  The Balcor Company, a Delaware
                                             corporation
                                        Its:      General Partner

                                        By:  /s/Jerry M. Ogle
                                             -------------------------------
                                        Its: Vice President and Secretary
                                             -------------------------------

                                   By:  Colonial Storage 86, Inc., a Texas
                                        corporation, a General Partner

                                        By:  /s/James R. Pruett
                                             -------------------------------
                                        Its: President
                                             -------------------------------

Dated:  March 19, 1996
Exhibit Index
                  -------------

                                              Sequential
                                                 Page
 Exhibit #               Item                   Number
-----------   ---------------------------     ----------
   2.1        Agreement of  Sale  between         5
              Storage  Trust  Properties,
              L.P.  and   Balcor/Colonial
              Storage   Income   Fund-86,
              dated as of March 5,  1996,
              as amended.