The simplest option would be to use
http://www.gmayor.com/Envelope_Label_Add_In.htm .
See also
http://www.gmayor.com/changing_envelope_layout.htm which demonstrates how to configure the envelope tool to format the address.
Mail merge is overkill for a single envelope, but if you want to use that, then don't use the addressblock field. Use instead the individual fields that make up the address.