You use âfeelingâ instead of âfeltâ because the sentence gives an ongoing feeling. It is a progressive situation. He kept feeling like that for a while. The plaza got empty (past tense), but he looked again there and it gave him the feeling of being less desperate. If you want to use felt than the sentence could be: When he looked around at the empty plaza, he felt less desperate than before. ( in this case the action started in the moment that he looked at the empty plaza and ended right in that moment). No progressive action.
Hope this helps you