Some of the largest US pension funds are starting to back away from trophy properties in the most expensive real-estate markets over concerns a new bubble is inflating.

After property prices crashed during the financial crisis, pension funds-among the biggest investors in commercial real estate-turned their investment strategies away from risky speculative projects and toward properties considered "core," well-leased buildings that are seen as low risk due to their stable income, in cities such as New York, Washington and San Francisco.