Honestly, the "soft let down" tends to hurt guys even worse because they know you're not only rejecting them, but you're pitying the absolute shit out of them and think they can't handle you being straight up.
Just tell him flat out: "Listen it was nice getting to know you but I don't see this going anywhere. There's just no chemistry and I don't want to lead you on because you're actually really cool and fun to hang out with."
most women just say, I have a boyfriend, sorry. I wish you the best in finding the relationship you want.
that may not work in this case...
I'd say "billybob, I like you but as a friend, I'm not interested in dating, I'm sorry, I just don't feel the chemistry." But I know there is a girl out there for you, have you talked ot my friend suzie?" something like that...
with most guys just out it out there for him no playing games or making him question if your serious about him or not. because most guys think its stupid to play the do you like me game. when all they need is a simple yes or no your not interested in him.
there are a lot of guys in the friend zone with girls more than girls are with guys i think. and the friends thing works out fine and there is no awkwardness when you guys hang out or anything. and its just a lie and myth than being in the friend zone is a bad place to be.
yeah you got your guys who think a little smile means your falling in love with him but him getting hurt is his own fault for trying to put to much into something your not wanting. these kind of guys can be real jerks some times.
By just being understanding and polite while being HONEST
Last time I friendzoned someone it was like "You are a cool person, you know that. We usually have a blast when hanging out. You've always been a good friend to me, and.. well... I am sorry, but I'm going to be completely honest with you. I don't see you as more than the awesome friend that you are. I'm not attracted to you, but I know that you're an awesome girl blablabla
Just flat out tell him that you are not interested in a romantic relationship. If you explicitly state that you are not interested then he will get the message. If you give an excuse to try and soften the blow to his ego he might be under the impression that there is a chance you could somehow change your mind.
There is no better way than to tell it like it is. "look man, you're a really cool dude and I love you like a brother, but nothing else will ever happen between us." And then he'll be distraught, then heart-broken and everything will be cool until he hits the gym, reads pick-up artist books and tries again in 5 years.
You're still leading him on by choosing to stay friends with him. He's thinking he still has a chance because you're still dragging him on. Let him go, don't be friends with him at all. And sometimes, you just have to speak your mind. He should respect you for your honesty. Don't waste his time anymore or yours.