Levi and I moved from a house with a huge, fenced-in backyard to a third-floor apartment. He adjusted fine and is just as happy in our apartment as he was in the house.
Levi is both outdoor and pad-trained as well, but we still try to take him out every four hours. He prefers to go outside, and I like for him to get walks and fresh air. We go to off-leash dog parks, visit friends with fenced-in yards, and play lots of fetch down our longest hallway. My brother's bigger dog lives with us as well, and he and Levi play and run and wrestle all day long. He gets constant exercise; it's just not as mindless as letting him play in a fenced yard all day.
I feel your pain on the non-refundable pet deposits.