I'm curious. Was he the only male in that group?
This could be just an office flirtation with private fantasies, but you're playing with fire here. I suspect that you are an easy person to be infatuated with, particularly when that person has compatible character traits. If that happens, that may degrade his relationship with his significant other as well as be detrimental to the professionalism at work. Be careful. There is a high potential for non-fun hurt here.
You are the best judge of his personality and your relationship. My uneducated guess is that being open and honest with him may help his self esteem (assuming you are not rubbing his nose in it). If he senses that he is being left out, he will feel more insecure.