Honestly, I would tell him this regardless. Make it blatantly, absolutely clear that you're just friends/coworkers/etc. Ask him if he is interested in you (as you believe he is, yes?) and if he is, nip it in the bud. Don't let him harbor feelings of attraction for a longer duration of time, trust me I have lived that experience and it is one of the worst imaginable, to hold out on someone who never liked you in the first place just because you didn't know.

But, also, as it's been said, he's going to be hurt. It's inevitable. But the kindest thing to do is be totally honest with him and not beat around the bush with it.