I've got this problem too. Anyone tried using iMazing or Apple Configurator 2 instead?
I trked Apple Configurator 2 and it did update the app on the phone, but I can't see the download anywhere. I guess I was hoping that if it downloaded then I could copy it to iTunes for future use...
A quick google search later, I found it here:
~/Library/Group Containers/K36BKF7T3D.group.com.apple.configurator//Library/Caches/Assets/TemporaryItems/MobileApps/51A7935F-F02E-48B3-A807-86EE722C787C/1380676511/BBC Sounds 1.16.1.ipa
So I used a command like this to copy the file somewhere useful:
find ~/Library/Group\ Containers/K36BKF7T3D.group.com.apple.configurator/ -name "*.ipa" -exec cp {} /Volumes/QNAPRAID/itunes/ \;
From there I can drag it into iTunes.
It only seems to download apps that you actually have installed on the device. So if you have several devices and different apps installed on some to others, you need to perform the update on each.
Also I'd not used Apple Configurator 2 before so wasn't already signed in to my personal itunes account. There is no meaningful error if you are not signed in - it just doesn't let you update apps.
I don't see this as very useful long term, but as a short term fix it may be ok.