WASHINGTON, DC—There is plenty of reason to think that the Federal Reserve Bank won't raise interest rates at its next policy meeting, despite its avowed promises to hike them this year.

On the other hand they have to be raised at some point and if the Fed doesn't want to completely lose face with investors and the rest of the world, it probably will raise the rates before year's end.

But no matter when that day comes, DC area landlords should be dreading it, according to a report by Colliers Insights called "Slow Rent Growth to Trouble DC Market."

Or at least brace for it, per the report's language. "Leveraged investors who rely heavily on debt may struggle to maintain values with even a modest escalation in interest rates in most of the area's submarkets," writes report author Robert Hartley, director of Research for Colliers International.

"The impact of spending cuts by the federal government on the local contracting industry combined with the new 'workplace efficiency' strategies have decreased demand for office space in the market over the last few years," he continues in the report, which was co-authored by William Kaye, executive vice president of Investment Services. "This has resulted in office rent growth slowing significantly in nearly all segments of the market and has created associated market risk.

The end result will be lackluster investment sale prices as many of the region's office markets won't be able to generate enough rent growth for these leveraged owners to maintain existing cash flow as rates rise.

That conclusion is the result of simple math: highly-levered landlords who used floating rate debt will have reduced earnings after servicing debt obligations in a rising interest rate environment -- even when accounting for the built-in annual average increases in leases of 2.5%.

"While the Best-in-class/trophy assets in the downtown market would likely keep close to pace, assets in nearly all of the Northern Virginia and suburban Maryland markets would see some erosion in leveraged cash flows as a result of these increases," the report concludes.