Subtly? Are you asking me how to subtly crush someone’s heart? That’s not something that’s possible to do. It’s like asking me to feign an attraction to Mila Kunis. You can’t feign the TRUTH.
Although I do find the idea of muttering “I’ll never like you that way” to him on your way out of a shared elevator perversely amusing.
If he’s lain his affections ‘pon ye, and you don’t reciprocate, there’s no question that he needs to know about it, and there’s no doubt that whenever and however he finds out, it’s not going to end in a Fred Astaire-esque tap number.
And, to be honest, if your goal is to salvage the friendship, it’s more about him than you. Your friendship won’t disintegrate because you stop liking to hang out; it will disintegrate because he can’t sit through a movie with you without tearfully professing his love for you, accusing you of “tearing him apart,” or spraypainting “tease” across the hood of your car. Trust me, guys can be real bitches about this sort of thing.
Tell him, and soon. Be nice about it, but screw subtle. Leading him on is the only way to make this awkward situation many times worse. If it seems like he needs some time to freak out, give it to him, and you’re a lot more likely to keep him as a friend down the line.