Moving to the next stage

I am interested in a male friend, who is also interested in me. He told me his feelings awhile back, but at the time both of us were still involved with other people. Those relationships have since ended, and male friend and I are now officially at the "maybe" stage. We have been friends for a few years, incidentally, so know each other fairly well on that level.

I don't know if he knows that I am interested in him; I am very shy. My last relationship was also very long, so it's been awhile since I've done the whole dating/ flirting thing.

Male friend has broken the "touch barrier" with me already; we hugged once, and during our conversations he continually touches my arm, back, etc. I love it, and it feels great, but I've been too shy to do it back.

We are meeting for drinks this week, and I'd like to move things along between us. I'm unsure on how to do this. Should I tell him that I am attracted to him, as he told me before? Or should I give him physical signals? It's a little difficult because, up until now, we have been "friends only" and so we are used to, for example, sitting on opposite sides of the table when we go out together. So physical contact can be tricky, and I feel like it might be too obvious (desperate?) to suddenly change that and sit next to him/ cozy up to him. Although I want to!

I am obviously confused. :) Any advice on how to make this next step would be so helpful!